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144 Cards in this Set

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  • Back

What is RESPA

The Real Estate Settlement Procedures Act (RESPA) the purposes of RESPA is to help consumers become better shoppers for settlement services and.

REG X

What type of loans do not apply to RESPA

-25 acres or more


-business, commercial or agricultural


-bridge loans


-vacant lot when no proceeds will be used to construct a residence


-assumptions


-sale of loan into secondary market


- loan conversions



RESPA Violations

Things of value, agreements or understandings, Fee-Splitting, kickbacks, markups.

Affiliated Business Arrangement (ABA)

When a service provider has a business relationship or ownership interest in another service provider.

ECOA

Equal Credit Opportunity Act ECOA


makes is unlawful for any creditor to discriminate against any applicant, with respect to any aspect of a credit transaction, on the basis of race, color, religion, national origin, sex & marital status.


Reg B (BBBBfair)

CFPB

The Consumer Financial Protection Bureau(CFPB) is an independent agency of the United States government responsible for consumer protection in the financial sector.


**Was established to prevent predatory mortgage lending and make is easier for consumers to understand the terms of a mortgage before finalizing the paperwork.

Dodd-Frank Act

Its major purpose is to:


~make the financial system more transparent & accountable


~prevent institutions from becoming too big to fail


~end government bailouts funded by taxpayers


~end risky and abusive financial services practices

HOEPA

Home Ownership and Equity Protection Act


~predatory lending for high cost loans.


~sent to borrower within 3 business days



TILA

The Truth in Lending Act (TILA) is designed to promote the informed use of consumer credit, by requiring disclosures about its terms and cost to standardize the manner in which costs associated with borrowing are calculated and disclosed.
Reg Z (Zzzzz - til)

HPML

High Priced Mortgage Loan



HMDA

Home Mortgage Disclosure Act


~tracks Sex, Race & Nationality



HPA

Homeowners Protection Act


Established to facilitate the cancellation of PMI


~Exempt FHA/VA

SAFE Act

Secure and Fair Enforcement for Mortgage Licensing Act


The act requires federally regulated loan originators to register and become licensed through the NMLS (federal & state).


REG H (HHHHOW safe are you??)

What is the required amount of training needed for NMLS licensing?

20 hours of education


3hrs Federal /2hrs Ethics /2hrs nontraditional mortgage market place

The purpose of the Secure and Fair Enforcement Act was to enhance _____________ protection and reduce ____________.

Consumer - Fraud

Unlike with a fixed rate mortgage, with an ARM the interest rate changes periodically, usually in a relation to an _________.

Index

The extra amount the lender adds to the index rate to determine the ARM interest rate is called a ________.

Margin

The margin plus the index rate equals the __________ indexed rate.

Full

____________ adjustment caps limit the amount the interest rate can adjust up or down from one adjustment period to the next after the first adjustment.

Periodic

A ________________ cap limits the increase in an ARMs monthly payment by deferring some of the interest.

Payment



Negative __________ occurs when the amount owed increased because the monthly mortgage payments are not large enough to pay all of the interests changes.

Amortization

A ___________ __________ is an individual who, for compensation or gain, takes a residential mortgage loan application.

Loan Originator

_________ or _________ duties include the receipt, collection, distribution and analysis of information common for the processing and underwriting

Clerical or Support

An __________ is an individual whose manner and means of performance of work are subject to the right of control or or are controlled by a person.

Employee

A __________ ________ is assigned by protocols established by the NMLS.

Unique Identifier

A mortgage loan originator placing an advertisement for consumer credit must comply with the advertising requirements of the ______________ _____________ Act and Reg ________.

Truth in Lending - Z

If an ad states a rate of finance charge, it must also state the rate as an ___________________, using that term or abbreviation "APR".

Annual Percentage Rate

It is prohibited for any person when engaging in mortgage loan origination activity to engage in any _________ or __________ practice toward any person.

Unfair - deceptive

The administrative authority of the Commissioner includes all but which of the following?


a) Promulgate rules or regulations implementing the SAFE act.


b)Administer, interpret and enforce the SAFE Act


c)Carry out the intentions of the Legislature


d) Sentencing violators of the SAFE act to appropriate prison terms

d) Sentencing violators of the SAFE act to appropriate prison terms

Which of the following individuals performs clerical or support duties as an employee at the direction of a licensed or exempt institution?


a) A sole proprietor


b) A loan processor


c) An attorney representing a client in an ancillary capacity


d) An underwriter acting as an independent contractor

b) A loan processor

An immediate family member s considered any of the following except;


a) Adoptive children


b) Cousins


c) Stepsiblings


d) Granparents

b) Cousins

All but which of the following must be completed prior to engaging in the business of a loan originator?


a) A letter of recommendation from a former employer


b) Payment of licensing fees


c)Obtain a unique identifier


d) Completing pre-licensing education



a) A letter of recommendation from a former employer

How many total hours of ethics are required, at minimum, for continuing education?


a) 2


b) 3


c) 8


d) 11

a) 2

A licensee may attempt a qualified written exam three consecutive times, each occurring at least _____ days after the preceding test.


a) 30


b) 45


c) 90


d) 180

a) 30

After failing a pre-licensing exam for a third consecutive time, a licensee is required to wait;


a) 30 days


b) 60 days


c) 120 days


d) 180 days

d) 180 days

determining that an individual licensee has not shown financial responsibility includes all but which of the following?


a) A pattern of seriously delinquent accounts in the past 3 years


b) current outstanding tax liens


c) Judgments as a result of medical expenses


d) Foreclosures within the past three years



c) Judgments as a result of medical expenses

If a loan originator has not renewed his/her license by December 31st, he/she may:


a) Not continue to conduct any loan originator activities until the license has been renewed


b) Only see through completion of those loans originated prior to license expiration


c) continue to honor existing contracts and be compensated only for those loans already in the pipeline


d) continue to conduct business as normal as long as a renewal application is submitted prior to the "late renewal" deadline

a) Not continue to conduct any loan originator activities until the license has been renewed

A loan originator license is valid for __________ year(s).


a) 1


b) 2


c) 3


d) 5

a) 1

Which of the following individuals is required to be licensed as a loan originator?


a) A real estate broker who refers clients to a mortgage company


b) A licensed attorney who works part-time with a lender originating loans


c) A time-share salesperson


d) An underwriter working as an employee of a depository institution

b) A licensed attorney who works part-time with a lender originating loans

A borrower accepts a 30-year fixed rate loan at 5% and requests that the terms and fee be locked in. At closing, the borrower learns his loan is now ready to close as a seven-year ARM with a 3.75% rate. The loan originator explains that it is a better loan because of a lower rate, and the ARM is not much of a risk because of the lower rate, and the ARM is not much of a risk because of the extended duration of the start rate. Which of the following is most accurate?


a) The originator is engaging in unfair and deceptive trade practices


b) The originator is not at fault as the new rate and payment are lower


c) The borrower has no recourse, as the loan has better terms


d) The originator is acting in good faith in giving the borrower an ARM loan because the initial rate is a more that .50% drop from what was quoted

a) The originator is engaging in unfair and deceptive trade practices

Which of the following would be considered grounds for license denial?


a) convicted f a felony with the 7 years immediately preceding application


b) Payment of licensing fee


c) Compliance with the pre-licensing education requirements


d) Providing records of previous loan files



a) convicted f a felony with the 7 years immediately preceding application

Which of the following mortgage industry documents might the borrower be asked to sign while it still contains blank sections?


a) A TIL disclosure


b) A broker agreement


c) A verification of employment


d) The promissory note

c) A verification of employment

Sam Slezee was found to be providing mortgage loan origination services without a state license. A temporary order to cease and desist in such activities was issues against Sam. While under the order Sam completed three transactions. What is the maximum fine a state licensing agency may impose on him?


a) $25,000


b) $50,000


c) $75,000


d) $100,000

c) $75,000

Under the SAFE Act, states are required to do background checks as part of their effective supervision. A background check includes all of the following except;


a) Criminal history


b) Credit history


c) Education history


d) Civil or administrative records

c) Education history

When a state agency is conducting a background check, which state department is required to provide access to an applicants criminal history information?


a) The secretary of state


b) The attorney general


c) The sate police agency


d) The state archives office

b) The attorney general

Buffy Sleigher is taking her pre-licensing courses. While taking her two hours of coursework in lending standards of the nontraditional mortgage products marketplace, Buffy learned that nontraditional lending includes any loan product other than a;


a) 30 year fixed rate


b) fixed rate regardless of the term


c) adjustable that is not a subprime


d) Mtg that doesn't qualify as a loan under the Home Ownership and Equity Protection Act

a) 30 year fixed rate

The sate in which Jim Jungle worked requires a originator to be covered by a surety bond. The bond must be maintained in an amount that reflects;


a) the number of loans originated by Jim annually


b) The number of loan Jim's employer originates annually


c) the dollar value of loans Jim originates annually


d) Jim's experience as a loan originator





c) the dollar value of loans Jim originates annually

Desperate to increase her business, Sandy has advertised a loan product that has very attractive term but which does not actually exist in the marketplace. She plans on telling consumers who inquire about the product that it was pulled form the market and then steer then to other loan products that are actually available. By doing this, Sandy has engaged in;


a) trolling advertising


b) fishing advertising


c) Bait-and-switch advertising


d) scamming advertising

c) Bait-and-switch advertising

After viewing a house they were interested in buying, the Foxxes stopped by Brian Hobbits business to explore lending options. After discussing several products, the Foxxes asked about the cost of credit. Even though this is an oral question, Brian must disclose information about each discussed products;


a) finance charge


b) terms of repayment


c) estimated escrow requirement


d) annual percentage rate



d) annual percentage rate

Gabby is a loan originator who is employed by Hayes Mortgage Brokerage. In preparing the TIL, the broker fees that will be paid to her employer will be shown as part of the;


a) Finance Charges


b) Loan Fees


c) Third-party fees


d) Prepaid finance charges

a) Finance Charges

The functions of participating in the NMLS, conducting background checks, and writing rules and regulations are required under the SAFE Act of;


a) A state licensing agency


b) A state legislature


c) A state attorney general


d) The federal government



a) A state licensing agency

A state licensing agency is conducting an examination of the Willow Wands loan origination activities. In doing so, it may do all of the following except;


a) require Willow to compile reports related to her loan transactions


b) Subpoena books and records


c) Close Willows business for the period of the examination


d) Control access to Willows book sand records



c) Close Willows business for the period of the examination

Sam Going want to be a mortgage loan originator. As part of the requirements to be licensed, Sam must;


a) Sign an affidavit, indicating he will only be licensed in that state


b) register his license with the secretary of state


c) register with and maintain a valid unique identifier issues by the NMLS


d) Paid the required licensing fees to the state

c) register with and maintain a valid unique identifier issues by the NMLS

Jesse James was convicted of felony assault eight years ago. Billy Kidd was convicted of fraud 17 years ago. Both have made application to their state to be licensed as mortgage loan originators. What effect will their past records have on their license applications?


a) both Jesse & Billy will be denied a license because of their felony convictions


b) Jesse may be granted a license; Billy will not


c) Billy may be granted a license; Jesse will not


d) Both Jess and Billy may be granted a license



b) Jesse may be granted a license; Billy will not

The state in which William is licensed does not provide a time period in which to make up continuing education deficiencies. Since William did not complete his required eight hours, what will happen to his license?


a) he will be issued a conditional license


b) He may apply for an interim license


c) His license will be revoked


d) His license will expire

d) His license will expire

Lester is calculating prepaid finance charges that will be withheld from the proceeds of the loan. These direct loan charges paid by the borrower must be included in computing the;


a) annual percentage rate


b) broker fees and the amount charged by a third party


c) amount of the payment


d) Length of the loan



a) annual percentage rate

Harry is working with the Hendersons who are considering an adjustable-rate mtg. At the time that Harry provides the Henderstons with an application form he is also required to provide all of the following except;


a) the CHARM booklet


b) The loan program disclosure


c) Alternative mortgage options


d) information about the index, margin and the frequency of rate adjustments

c) Alternative mortgage options

The approval or denial of loan originator license applications is a function of the;


a) NMLS


b) Individual states


c) Consumer Financial Protection Bureau


d) Secretary of Housing and Urban Development

b) Individual states

Once a state licensing agency has provided private or confidential information to the NMLS, what is the status of the information?


a) It becomes a matter of public record


b) It remains confidential only in the state requests it


c) Privacy and confidentiality requirements continue to apply


d) States do not provide private or confidential information to the NMLS.

c) Privacy and confidentiality requirements continue to apply

Wilbur Green is applying for a loan originator license. His credit indicates that he has a number of judgments files against him, all related to a serious medical condition his wife suffered four years prior. Will Wilbur be denied a license because of the judgments?


a) yes, current outstanding judgement show a lack of financial responsibility


b) No, because the judgement are a result of medical expenses, they will not be held against him


c) Yes, because they indicate a pattern of seriously delinquent account within the past three years


d) The judgement will not be held against him because they were entered more than 3 years ago.

b) No, because the judgement are a result of medical expenses, they will not be held against him

Betsy is preparing the Truth-in-Lending Disclosure Statement for delivery to her client. While figuring the annual interest rate, she must show the relationship of the total finance charge to the total amount financed. Finance charges include which of the following?


a) Credit report fee


b) Points paid by the buyer


c) Points paid by the seller


d) Title insurance premium

b) Points paid by the buyer

In completing a Truth-In-Lending Discl statement, information that must be disclosed to a borrower includes all of the following, except;


a) the annual percentage rate


b) the finance change


c) Appraisal fees


d) the total of the payments

c) Appraisal fees

When Connies sister Callie lost her job during a downsizing, Connie suggested that Callie work with her in origination mortgages while she looks for another position. Callie, too, could originate loans, using Connies unique identifier, saving Callie the time and expense of obtaining her own loan originator license. Connie would then split the fees with her sister. Which of the sisters is guilty of engaging in a prohibited act?


a) both Connie and Callie


b) Connie, but not Callie


c) Callie, but not Connie


d) Neither sister

a) both Connie and Callie

Under the SAFE Act, the term "person" may refer to each of the following, except;


a) Natural Person


b) State Licensing agency


c) Association


d) Limited Liability company

b) State Licensing agency

Jason Bean acts as a loan originator in carrying out his official duties as an employee of a local government agency. Jason is a;


a) Registered loan originator


b) State-sanctioned loan originator


c) Exempt loan originator


d) Government loan originator

c) Exempt loan originator

Kelsey is a registered loan originator who is employed by the Home Town Bank, a depository institution regulated by a federal banking agency. Each of the following is a federal banking agency, except the;


a) Board of Governors of the Federal Reserve System


b) Federal Home Loan Mortgage Corporation


c) Comptroller of the Currency


d) National Credit Union Association



b) Federal Home Loan Mortgage Corporation

Mortgage loan originator Janine is assisting the Barstows in obtaining a residential mortgage loan. Her assistance may include all of the following, except:


a) Providing advice on loan terms


b) Preparing loan packages


c) Collecting information on behalf of the consumer


d) making a loan commitment

d) making a loan commitment

The minimum standards for license renewal include all but which of the following?


a) a production report for all licensed originators


b) Continuing to meet the minimum standards for license issuance


c) Satisfaction of annual continuing education requirements


d) Payment of renewal fees

a) a production report for all licensed originators

Fair Housing Act

#

Yield Spread

#

How are FHL Loan limits established?


A. FHFA establishes loan limits for FHA


B. HUD establishes loan limits for FHA based on county-by-county limits


C. FHA uses loan limits based on Fannie and Freddie


D. Loan limits are set by GNMA

B. HUD establishes loan limits for FHA based on


How is a margin determined?


A. The broker determines margin based on the commission structure on the loan


B. The lender sets the margin by choosing an index to tie it to


C. The borrower chooses which margin he/she prefers


D. The lender sets the margin based on its costs and sought-after profit margin

D. The lender sets the margin based on its costs and sought-after profit margin


Fees charged for an early repayment of a debt are know as:


A. Deferred payment loan


B. Prepayment penalty


C. Acceleration


D. Finance Charges

B. Prepayment penalty


Cindy bought a home and closed on a 6.0% rate for 30 years. It has a $1,400/month payment for five years, and a $1,800/month payment for the remainder of the loan. What type of loan is this?


A. Option ARM


B. Variable


C. ARM


D. Fixed-rate

D. Fixed-rate


Folr ARMS characterized by numbers like 3/1, 5/1, 7/1, or 10/1, the first number represents__________________, and the second number represents_________________.


A. The start rate; the periodic cap


B. The locked term; the adjustment cap


C. The locked term; the adjustment frequency


D. The initial cap; the periodic cap

C. The locked term; the adjustment frequency


If a seller is struggling to sell his/her home and would like to entice a potential buyer with a deal he/she cannot refuse, the seller could offer to:


A. Help get the buyer elected to the board of the HOA


B. Pay for an appraisal


C. Pay discount points for the buyer to lower his/her interest rate


D. Pay for utilites for a year

C. Pay discount points for the buyer to lower his/her interest rate


A conditional refinance provision might be a feature of what type of loan?


A. 15-year fixed


B. Balloon


C. Option ARM


D. Interest-only ARM

B. Balloon


Money paid by a buyer to a seller at the time of entering into a contract to indicate intent and ability to carry out the contract is called:


A. Earnest money


B. Escrow funds


C. Down payment


D. Service release premium

A. Earnest money


John Justice took out a great loan four years ago that offered him a minimum payment option. He took full advantage of the opportunity and saved thousands of dollars in payments. Unfortunately, when John finally looked at his statement closely, he noticed that his $200,000 loan was now showing a balance of $224,000. This is an example of:


A. Reverse mortgage


B. Finance charge


c. Growing equity loan


D. Negative amortization


D. Negative amortization


Securitization helps lenders to:


A. Exchange active loans to another entity for new funds for more loans


B. Increase the menu of products available to their customers


c. Make more loans to lesser-qualified customers


D. Provide funds to the highest bidder on the secondary market

A. Exchange active loans to another entity for new funds for more loans


All of the following are characteristic of a subprime borrower, except:


A. Credit scores above the national average


B. Bankruptcy within the past five years


C. Foreclosure, repossession, or charge offs within the past 24 months


D. Two or more 30-day delinquencies within the past 12 months

A. Credit scores above the national average


Negative amortization:


A. Occurs when a borrower pays only interest due


B. Defers principal


C. Occurs when the mortgage payment is less than the interest currently due


D. Describes the result of a default

C. Occurs when the mortgage payment is less than the interest currently due


Loans that do not meet guidelines established by Fannie Mae and Freddie Mac are known as:


A. Government


B. Non-conventional


C. Unconventional


D. Non-conforming


D. Non-conforming


All of the following are credit repositories, except:


A. Equinox


B. Equifax


C. Experian


D. TransUnion

A. Equinox


The best strategy for a borrower to use to accelerate payoff of a 30-year mortgage is:


A. Using a bi-weekly payment strategy


B. Paying only interest on a 30-year loan until it recasts after five years


C. Refinancing if the market rate drops by more than 1%


D. Paying the minimum payment on a pay-option ARM

A. Using a bi-weekly payment strategy


All of the following may affect the amount of a VA funding fee, except:


A. 10% down payment


B. Disabled


C. First-time use of the VA eligibility


D. Marital status


D. Marital status


FHA ARMs can have terms of:


A. Three and five years


B. One, three, and five years


C. One, three, five, seven, and ten years


D. Three, five, seven, and ten years

C. One, three, five, seven, and ten years


All of the following types of income are non-taxed and therefore can be "grossed-up,) except:


A. Social Security


B. Alimony


C. Disability


D. Public assistance

B. Alimony


When a creditor takes steps legally to force the sale of a property in an effort to collect on a loan in default, it is known as:


A. Acceleration


B. Repossession


C. Foreclosure


D. Default

C. Foreclosure


If a borrower has a credit score below 620 and wants to purchase a home using an FHA loan, he/she must make a down payment of at least:


A. 0%


B. 5%


C. 1.5%


D. 3.5%


D. 3.5%


If a borrower has had credit problems in the past, he/she may be most suited for what type of loan?


A. Non-conforming


B. Conforming


C. Traditional


D. Subprime


D. Subprime


What ratio of loan amount to VA entitlement would be acceptable?


A. $400,000 to $20,000


B. $100,000 to $6,000


C. $200,000 to $10,000


D. $300,000 to $30,000


D. $300,000 to $30,000


If a lender sells it right to service a loan to another entity:


A. The lender may earn SRP


B. The lender may earn YSP


C. The lender is giving up it ownership of that loan


D. The servicer will collect commission from the lender

A. The lender may earn SRP


"Borrower credit" may also be referred to as:


A. Mortgage broker fee


B. Direct compensation


C. Service release premium


D. Lender's rebate


D. Lender's rebate


A loan with a fixed period at the start that will adjust regularly after a certain period is commonly referred to as a(n):


A. Traditional ARM


B. Hybrid ARM


C. Option ARM


D. Nontraditional ARM

B. Hybrid ARM


How is the margin determined?


A. The broker determines margin based on the commission structure on the loan


B. The lender sets the margin by choosing an index to tie it to


C. The borrower chooses which margin he/she prefers


D. The lender sets the margin based on its costs and sought-after profit margin


D. The lender sets the margin based on its costs and sought-after profit margin


Fees charged for an early repayment of a debt are known as:


A. Deferred payment loan


B. Prepayment penalty


C. Acceleration


D. Finance Charges

B. Prepayment penalty


Cindy bought a home and closed on a 6.0% rate for 30 years. It has a $1,400/month payment for five years, and a $1,800/month payment for the remainder of the loan.


A. Option ARM


B. Variable


C. ARM


D. Fixed Rate


D. Fixed Rate


For ARMS characterized by numbers like 3/1, 5/1, 7/1, or 10/1, the first number represents________________, and the second number represents______________________.


A. the start rate; the periodic cap


B. The locked term; the adjustment cap


C. The locked term; the adjustment frequency


D. The intial cap; the periodic cap

C. The locked term; the adjustment frequency


If a seller is struggling to sell his/her home and would like to entice a potential buyer with a deal he/she cannot refuse, the seller could offer to:


A. Help get the buyer elected to the board of the HOA


B. Pay for an appraisal


C. Pay discount points for the buyer to lower his/her interest rate


D. Pay for utilities for a year

C. Pay discount points for the buyer to lower his/her interest rate


A conditional refinance provision might be a feature of what type of loan?


A. 15-year fixed


B. Balloon


C. Option ARM


D. Interest-only ARM

B. Balloon


Money paid by a buyer to a seller at the time of entering into a contract to indicate intent and ability to carry out the contract is called:


A. Earnest money


B. Escrow Funds


C. Down Payment


D. Service release premium

A. Earnest money


John Justice took out a great loan four years ago that offered him a minimum payment option. He full advantage of the opportunity and saved thousands of dollars in payments. Unfortunately, when John finally looked ar his statement closely, he notice that his $200,000 loan was now showing a balance of $224,000. This is an example of:


A. Reverse mortgage


B. Fonance Charge


C. Growing equity loan


D. Negative amortization


D. Negative amortization


Securitization helps lenders to:


A. Exchange active loans to another entity for new funds for more loans


B. Increase the menu of products available to their customers


C. Make more loans to lesser-qualified customers


D. Provide funds to the highest bidder on the secondary market

A. Exchange active loans to another entity for new funds for more loans


All of the following are characteristic of subprime borrower, except:


A. Credit scores above the national average


B. Bankruptcy within the past five years


C. Foreclosure, repossession, or charge offs within the past 24 months


D. Two or more 30-day delinquencies within the past 12 months

A. Credit scores above the national average


Negative amortization:


A. Occurs when a borrower pays only interest due


B. Defers principal


C. Occures when the mortgage payment is less than the interest currently due


D. Describes the result of a default

C. Occures when the mortgage payment is less than the interest currently due


Loans that do not meet guidlines established by Fannie Mae and Freddie Mac are known as:


A. Government


B. Non-conventional


C. Unconventional


D. Non-conforming


D. Non-conforming


All of the following are credit repositories, except:


A. Equinox


B. Equifax


C. Experian


D. TransUnion

A. Equinox


The best strategy for a borrower to use to accelerate a payoff of a 30-year mortgage is:


A. Using a bi-weekly payment strategy


B. Paying only interest on a 30-year loan until it recasts after five years


C. Refinancing if the market rate drops by more that 1%


D. Paying the minimum payment on a pay-option ARM

A. Using a bi-weekly payment strategy


All of the following may affect the amount of a VA funding fee, except:


A. 10% down payment


B. Disabled


C. First-time use of the VA eligibility


D. Marital status


D. Marital status


FHA ARMs can have terms of:


A. Three and five years


B. One, three, and five years


C. One, three, five, seven, and ten years


D. Three, five, seven, and ten years

C. One, three, five, seven, and ten years


All of the following types of income are non-taxed and therefore can be "grossed-up," except:


A. Social Security


B. Alimony


C. Disability


D. Public Assistance

B. Alimony


When a creditor takes steps legally to force the sale of a property in an effort to collect on a loan in default, it is known as:


A. Acceleration


B. Repossession


C. Foreclosure


D. Default

C. Foreclosure

If a borrower has a credit score below 620 and wants to purchase a home using an FHA loan, he/she must make a down payment of at least:


A. 0%


B. 5%


C. 1.5%


D. 3.5%


D. 3.5%


If a borrower has had credit problems in the past, he/she may be morst suited for what type of loan?


A. Non-conforming


B. Conforming


C. Traditional


D. Subprime


D. Subprime


What ratio of loan amount to VA entitlement would be acceptable?


A. $400,000 to $20,000


B. $100,000 to $6, 000


C. $200,000 to $10,000


D. $300,000 to $30,000


D. $300,000 to $30,000


If a lender sells it right to service a loan to another entity:


A. The lender may earn SRP


B. The lender may earn YSP


C. The lender is giving up its ownership of that loan


D. The servicer will collect commission from the lender

A. The lender may earn SRP

"Borrower credit" may also be referred to as:


A. Mortgage broker fee


B. Direct compensation


C. Service release premium


D. Lender's rebate


D. Lender's rebate


A loan with a fixed period at the start that will adjust regularly after a certain period is commonly referred to as a(n):


A. Traditional ARM


B. Hybrid ARM


C. Option ARM


D. Nontraditional ARM

B. Hybrid ARM


A borrower is purchasing a $200,000 home, using VA eligibility for the first time. What is the minimum down payment required?


A. $7,000


B; $9,600


C. $0


D. $4,000

C. $0


Which of the following is the FHA's primary program?


A. 203(C)


B. 201(B)


C. 251(B)


D. 203(B)


D. 203(B)


With what type of loan do payments, including principal and interest, remain constant throughout the life of the loan?


A. An FHA loan


B. A balloon loan, as long as the maturity date is beyond ten years


C. An ARM with a conversion option


D. Fixed-rate


D. Fixed-rate


"UFMIP" stands for:


A. Uniform Financed Mortgage Insurance Premium


B. Uniform Front-end Mortgage Insurance Premium


C. Upfront Mortgage Insurance Premium


D. Uniform Funded Mortgage Insurance Premium

C. Upfront Mortgage Insurance Premium


The 11th District Cost of Funds Index is a product:


A. Used for FHA loans


B. Best suited for reverse mortgages


C. Published by the Federal Home Loan Bank of San Francisco


D. Tied to conforming mortgages

C. Published by the Federal Home Loan Bank of San Francisco


"FHA" stands for:


A. Federal Housing Act


B. Finance Housing Act


C. Finance and Housing Administration


D. Federal Housing Administration


D. Federal Housing Administration


The annual percentage rate is also know as:


A. The effective rate of interest


B. The actual dollar cost


C. The true rate of interest


D. The implied rate of interest

A. The effective rate of interest


A piggyback loan is most often used:


A. In the event a borrower is upside down on his/her loan


B. To finance home improvement projects


C. As a bridge from one property to the next


D. In order to avoid paying PMI


D. In order to avoid paying PMI


"SIVA" stands for:


A. Stated interest verification account


B. Simple interest validation account


C. Stated income validation amortization


D. Stated income verified assets


D. Stated income verified assets


A wholesale lending arrangement that permits a mortgage broker to originate, close, and fund a loan using a warehouse line of credit is called:


A. Table lending


B. Warehouse servicing


C. Table funding


D. Warehouse lending

C. Table funding


What term describes the transfer of ownership of real estate from one owner to another?


A. Transmittal


B. Reconveyance


C. Conveyance


D. Assignment

C. Conveyance


Which of the following is a government loan?


A. HUD


B. FNMA


C. USDA


D. FHLMC

C. USDA


Which of the following would prevent the conveyance of title?


A. Owner dies and leaves a legal will


B. Father passing title to his son while still living


C. Encumbrance


D. Paid lien

C. Encumbrance


Tom & Jim, purchase homes on the same block. Both pd $200,000 for their homes. Jim chose a "traditional" loan - 30-year fixed, while Tom decided on a 15-yr mtg. Which will pay more principal?


A. It depends on their rates B. Tom C. Jim


D. Both Jim & Tom will pay the same amt. of principal


D. Both Jim & Tom will pay the same amt. of principal


Originally, the main purpose of FHA insurance:


A. Was to allow borrowers with bad credit to still be able to obtain a loan


B. Was to allow lenders to offload unwanted loans to another entity


C. Was to ensure that low income families, 1st time buyers, & other borrowers who could not qualify for a conventional loan could obtain a mtg.


D. Meant that borrowers had a low cost option to obtain financing

C. Was to ensure that low income families, 1st time buyers, & other borrowers who could not qualify for a conventional loan could obtain a mtg.


In an ARM, margin is determined by:


A. The lender and represents the lender's operating costs & profit margin


B. The broker and is the amount of profit split between the broker & lender


C. The lender & represents the amt. of commission paid to the broker


D. The underwriter & represents the %of error allowable for debt-to-income ratio

A. The lender and represents the lender's operating costs & profit margin


The most commonly used type of reverse mortgage is know as a :


A. Home equity consolidation mortgage


B. Home equity completion loan


C. Home equity conversion mortgage


D. Home equity line of credit

C. Home equity conversion mortgage


What are the debt ratios for a USDA loan?


A. 41%


B. 28%/36%


C. 31%/43%


D. 29%/41%


D. 29%/41%


Foreclosure is the sale of a property after a borrower's default on pumts. The exact procdure the lender follows in order to foreclose is dependent on the absence or presence of a:


A. Deed in lieu of foreclosure


B. Power of sale clause


C. Mortgagee clause


D. Power of attorney

B. Power of sale clause


An ARM that allows a borrower to permanently "fix" his/her interest rate just prior to the initial locked period expiring carries a:


A. Conversion option


B. Modification clause


C. Converyance option


D. Refinance provision

A. Conversion option


In calculating an adjustment for an ARM, the fully-indexed rate is determined by adding:


A. The margin to the index


B. The index to the lifetime cap


C. The margin to the start rate


D. The start rate to the index

A. The margin to the index


Which of the following loan typed considers residual income in qualification?


A. USDA


B. HECM


C. VA


D. FHA

C. VA


The underwriting process:


A. Examines whether the collateral & applicant meet lender guidelines


B. Evaluates collateral for deficiencies & borrowers for solvency


C. Uses ratios & other criteria to approve a borrower


D. Evaluates a borrower for loan approval

A. Examines whether the collateral & applicant meet lender guidelines


An FHA loan is insured by the federal government against:


A. Flood or other hazard


B. Foreclosure


C. Market fluctuation


D. Fraud or misappropriation

B. Foreclosure


A document, properly executed that reliqueshes all interest & future rights is called a:


A. Quitclaim deed


B. Warranty deed


C. Promissory note


D. Mortgage deed

A. Quitclaim deed