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116 Cards in this Set
- Front
- Back
Which government-sponsored enterprises were placed into conservatorship in 2008? |
Fannie Mae and Freddie Mac |
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When depository institutions lose funds to higher-yielding investments, this is called? |
Disintermediation |
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Dealing with collection issues is an aspect of ? |
Loan Servicing |
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What is FNMA? |
A secondary market agency |
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A lender making a conventional loan would not necessarily comply with the underwriting guidelines of the major secondary market agencies if? |
The lender intended to keep the loan in portfolio. |
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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? |
Reduce |
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In 2005, Fannie Mae and Freddie Mac reversed policy and began buying significant numbers of what type of loans? |
Subprime loans |
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An independent mortgage company engaged in mortgage banking does what? |
Originates residential loans, but does not accept deposits |
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How is the nine-member board of directors of each Federal Reserve Bank chosen? |
6 directors are elected by stockholders and 3 are appointed by the Federal Reserve Board of Governors. |
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Who "owns" a Federal Reserve Bank? |
Member commerical banks within the district |
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What is required under the Community Reinvestment Act? |
Depository institutions must report the number of mortgage loans issued to low and middle income borrowers. |
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Economic growth that is too strong and too fast is usually accompanied by? |
Inflation |
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In contrast to wholesale lenders, retail lenders? |
Deal directly with loan applicants |
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The federal funds rate is the? |
Rate that banks charge each other for overnight, unsecured loans |
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What is not an aspect of the federal government's fiscal policy? |
Setting key interest rates |
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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 ? |
Mortgage company |
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A nonprofit organization provides banking services to the members of a large labor union. This organization would be known as a? |
Credit Union |
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The bill that imposed new rules on saving and loan associations as a result of the S & L crisis was the? |
Financial Institutions Reform, Recovery, and Enforcement Act |
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What 1999 legislation removed many barriers between commercial banks, investment banks, and insurance companies? |
Financial Services and Modernization Act |
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To lower interest rates, the Federal Reserve would? |
Decrease reserve requirements and buy government securities |
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Because the Federal Reserve will provide short-term emergency loans to banks who can't meet reserve requirements, it is known as a ? |
Lender of last resort |
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Deductions for depreciation of income generating property are also known as? |
?? |
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The most common alternative private source of lending to buyers is? |
Sellers |
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The borrower must meet the insurer's underwriting standards regarding mortgage insurance? |
True |
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Borrowers are more inclined to refinance when? |
Market interest rates drop |
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A mortgage must contain all of the following, except? |
The amount of the down payment |
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A lender cannot enforce a promissory note without a security instrument? |
False |
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A lis pendens is recorded by the mortgagee in order to ? |
Provide public notice of the foreclosure action pending against the property |
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Loan for the purchase of vacant land, when contstruction is planned |
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In a real estate transaction, a promissory note is accompanied by a ? |
Security Instrument |
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With an adjustable rate mortgage, the loan's interest rate? |
may increase or decrease during the loan term |
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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 ? |
Partially amortized |
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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? |
$228,600 |
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When a borrower excercises the conversion option in an ARM, the new fixed interest rate is usually? |
The market rate at the time of conversion |
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To be a holder in due course, a third party purchaser of a negotiable instrument? |
Has purchased in good faith, and without notice of any defenses against the instrument |
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A life of loan cap? |
Limits the amount the interest rate may increase over the life of the loan |
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The payments under a straight note are made up of? |
Interest only |
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The purpose of a loan guaranty is to ? |
Protect the lender from foreclosure loss |
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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? |
7/1 ARM |
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"Deny" is not a AU risk classification? |
Yes |
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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 ? |
$9,000 |
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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? |
False |
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Name something that is not likely to be considered an asset? |
Mixing Bowls |
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A loan applicant will not necessarily need to provide address and tax information for the house being purchased during the loan application process? |
True |
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How is Employment income verified? |
Verification forms sent to the employer |
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Underwriting is not a step in the closing process? |
True |
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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? |
Preapproval |
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Is this a true statement? The primary purpose of Desktop Underwriter and Loan Prospector is to make loan purchase decisions? |
Yes |
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What federal law requires the disclosure of a loan's annual percentgage rate in certain circumstances? |
Truth in Lending Act |
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In order to determine whether a borrower is creditworthy, the underwriter considers the borrower's? |
Net Worth |
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The relationship between the total finance charge and the total amount financed is expressed in a loan's? |
APR |
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Income is considered durable if it can be expected to continue for a least? |
3 years |
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Automated underwriting is a/an? |
Computer program that analyzes applications and recommends approval or rejection |
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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? |
Reserves |
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When choosing a lender, buyers should do all of the following except? |
Always choose the lender who offers the lowest interest rate |
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For a residential loan transaction, an appraiser will be concerned with a property's? |
Market Value |
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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 ? |
Functional obsolescence |
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The cost of constructing an exact duplicate of a building, using the same materials and construction methods but at current prices, is its? |
Reproduction cost |
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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? |
Yes, as long as Wilson is still paying at least 5% of the sales price out of his own resources |
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Under no circumstances should an appraiser using the sales comparsion method select a comparable that sold more than? |
One year ago |
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The buyer having to pay cash for the property is not a criterion for a sale under normal conditions? |
True |
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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 ? |
Growing Equity Mortgage |
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Affordable housing programs involving conventional loans often have? |
Maximum Income Limits |
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An informal version of an appraisal performed by a real estate agent, based on the sales comparision method, is a? |
Competitive market analysis |
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According to Fannie Mae, the two primary risk factors in qualifying an applicant are? |
Credit history and loan to value ratio |
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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? |
Comparable's sale price downward |
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The buyer will always pay a single life of the loan premium at closing regarding private mortgage insurance? |
True |
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The benchmark for the housing expense to income ratio for conventional loans is traditionally? |
28% |
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One of the three basic methods of appraising real estate is Quantity survey method? |
False |
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Under certain conditions, the lender is required to cancel the PMI whether or not the borrower's request cancellation? |
True |
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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? |
She's buying an energy efficient home |
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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? |
$12,500 |
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The Lenihans are buying a single family home with a FHA loan. The FHA Insurance will require? |
An upfront premium that may be paid in cash or financed, plus most likelyan annual premium |
|
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43% |
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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? |
$935 |
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Which eligible veteran may use a VA guaranteed loan? |
A veteran purchasing a duplex where he will live in one of the units |
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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? |
$620 |
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An underwriter would be concerned with residual income when evaluating an application for? |
A VA guaranteed loan |
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Which veteran would NOT be eligible for a VA guaranteed loan? |
A veteran who served 12 months of active duty during the late 1980's |
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The role of the FHA is to? |
Insure loans |
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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? |
$2,000 |
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What is the current maximum income limit for a VA loan borrower? |
There are no income limits for VA loans. |
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What would be a recurring charge counted toward a borrower's debt to income ratio? |
A student loan with four payments remaining |
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The Federal Housing Administration is an agency within the? |
Department of Housing and Urban Development |
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The basic maximum for FHA loans not in a high cost area is? |
65% of Freddie Mac's general conforming loan limit. |
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A VA loan may be used to refinance? |
A conventional, FHA, or VA loan. |
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A borrower obtains an FHA-insured loan through the 203 program. She may use the loan to purchase a? |
Duplex where she will occupy one of the units. |
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What federal law requires lenders to disclose information that would help detect instances of redlining? |
Home Mortgage Disclosure Act ( HMDA) |
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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? |
No |
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Which federal law applies to all consumer credit and prohibits discrimination against loan applicants? |
The Equal Credit Opportunity Act ( ECOA) |
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The federal legistation that prevents discrimination against loan applicants on the basis of race is? |
The Equal Credit Opportunity Act (ECOA) |
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What is the purpose of the Home Mortgage Disclosure Act? |
Requies that lenders disclose information that may provide evidence of redlining? |
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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? |
Redlining |
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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? |
3 |
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Would Mortgage Insurance Premium be included in a total finance charge? |
No |
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The Truth in Lending Act is inplemented through? |
Regulation Z |
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Would the appraisal fee be included in a total finance charge? |
No |
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Would a loan to an individual for $1,000,000 for the purchase of a residence be subject to Truth in Lending Act disclosures? |
Yes |
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What type of loans require extensive additional disclosures under the Truth in Lending Act? |
Adjustable rate mortgages |
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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? |
A Uniform Settlement Statement |
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Most predatory lending takes place in the subprime market? |
Yes |
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The Real Estate Settlement Procedures Act would apply to a loan from a commerical bank used to purchase an existing single family home? |
Yes |
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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? |
A good faith estimate of closing cost |
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Who is the most likely target for a predatory lender? |
An elderly person with a lot of home equity |
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Under the Real Estate Settlement Procedures Act, can a lender receive kickbacks and referral fees? |
No |
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Is Blockbusting a predatory lending practice? |
No |
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What best describes the content areas on the NMLS approved licensing exam? |
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. |
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According to the SAFE ACT a mortgage loan originator is? |
An individual who takes a residential mortgage loan application and offers or negotiates terms of a residential mortgage loan for compensation or gain. |
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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? |
True |
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One who assists a consumer in obtaining or applying to obtain a residential mortgage loan best described a? |
A Mortgage Loan Originator |
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When may a loan originator sign a borrower's application or related documents? |
Never |
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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? |
Independent Contractor |
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For a mortgage servicer, refusing to reinstate a delinquent loan after receiving a payment made to pay all past due amounts? |
Is Prohibited |
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An independent contractor may engage in residential mortgage loan origination activities as a loan processor or underwriter with a state issued loan originator license? |
False |
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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? |
The licensee meets the annual continuing education requirements of the state |
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The Nationwide Mortgage Licensing System and Registry (NMLS&R) was developed and is overseen by? |
The Conference of State Bank Supervisors (CSBS) and the American Association of Residential Mortgage Regulators ( AARMR) |