1000 Questions Flashcards
The practice of getting people to sell their homes at bargain prices by suggesting that certain ethnic groups are going to move into the area is nicknamed:
Blockbusting
You and the borrower believe an Adjustable Rate Mortgage would be best for the borrower. What is the name of the booklet you are required to give?
CHARM Booklet
Consumer Handbook On Adjustable-Rate Mortgages is provided by the lender to the loan applicant at the time of application for certain adjustable mortgage loans.
How many days in advance of transferring a loan to another lender must the current mortgage servicer inform that customer of the transfer to another lender who will subsequently be servicing the loan?
15 days
After meeting with the borrowers to complete a loan application, you return to your office and order a Tri-Merged credit report. Now that you have a credit report, what Loan Disclosure must you now prepare and mail (or give) to them?
Notice to Home Loan Applicant
In a face-to-face application, what do you do if the borrower refuses to fill out the race, ethnicity, and gender section on Section X of the 1003?
Use your best guess and complete the information in Section X of the 1003.
Which is not part of the original loan application?
- Borrower’s marital status
- ECOA disclosure
- Borrower provided ethnicity
- Borrower provided birth date
ECOA Disclosure: A written ECOA Notice must be sent to the Applicant when a lender takes adverse action. ECOA disclosures must be kept for 25 months because Consumers can take Civil action (a lawsuit) which can be filed for ECOA violations to the 24 month
Which is not an application disclosure?
- Servicing disclosure
- Environmental hazard disclosure
- Appraisal disclosure
- APR disclosure
Environmental hazard disclosure
State law requires certain written disclosures to be made to prospective homeowners. The seller is required to disclose whether he or she is aware that the property has any environmental hazards such as asbestos, formaldehyde, radon, lead-based paint, fuel or chemical storage tanks, or contaminated soil or water.
What is not likely to happen if the lender/investor finds fraud?
- A 1% interest rate increase on the loan
- The lender and/or broker will be required to repurchase the loan
- The entire loan can be called due and payable
- The loan officer must pay back any premium made on the loan
A
What is the maximum penalty for providing false information on a federally related loan?
Up to $1,000,000 fine and jail time
What law requires the lender to collect borrower information for first mortgages and home improvement loans?
HMDA
HMDA requires the lenders to obtain what information for each borrower?
HMDA required the lenders to file a LAR (Loan Application Register) regarding the borrower’s: Ethnicity, Race and Sex (Section 10 of 1003 Loan Application)
Providing a referral fee to a realtor is?
- An acceptable practice
- An illegal practice
- An acceptable practice as long as it is a fair price for services actually provided
- Acceptable only if fully disclosed
its illegal done!
What are the penalties for giving a referral fee to a realtor?
$10,000 per incident and up to one year in jail
What is Section 8 of RESPA and penalties of violation?
prohibits kickbacks, fee-splitting and unearned fees.
$10,000 per incident and up to one year in jail
Which of the following does RESPA require on a purchase?
- Lead paint notice
- A 1008
- APR disclosure
- Settlement cost booklet
CFPB has issued an updated version of the home buying information booklet required under RESPA:
Settlement Cost Booklet
Know before you owe Booklet
HUD Special Information Booklet
Aggregate escrow requires that the borrower have which of the following?
- $0 in the account or no more than 2 months impounds in reserves
- $0 in account, or no more than 1 month impound in reserves
- No more than 1% of the principal balance of the loan maximum in the impound account
- $100 and no impound reserves
$0 in the account or no more than 2 months impounds in reserves
What is the minimum amount of time that a lender has to inform the borrower that they are transferring servicing?
15 days
A yield spread premium is disclosed on which document?
- TIL disclosure
- Good faith estimate
- Servicing disclosure
- Rescission disclosure
GFE
Which is the primary law that affects mortgage loan closings?
- TILA
- ECOA
- RESPA
- HMDA
RESPA
.If a loan officer were to take a loan application Tuesday at 1:00 p.m., what is the last day that the good faith estimate must be mailed or disclosed?
Friday before midnight
If you are a seller, it is acceptable to REQUIRE the use of a specific title provider:
1.if the requirement pertains to the seller’s own policy only.
2.if the other service provider is an affiliate.
3.as long as you provide the borrower with the appropriate disclosure within three
business days of the loan application.
4.only if the service provider is licensed.
- if the requirement pertains to the seller’s own policy only.
RESPA imposes requirements about or prohibits all of the following except:
1.legal kickbacks and referral fees.
2.the loan origination fee.
3.the amount of prepaids.
4.information that must be disclosed to the borrower at the loan application or within 3
business days of the application.
the loan origination fee
Regulation Z requires:
- disclosure of the settlement costs to buyers and sellers.
- disclosure of the impound accounts and the prepaid of the borrower(s).
- computation and disclosure of the APR to the borrowers.
- disclosure of servicing information on the loan
computation and disclosure of the APR to the borrowers.
If a borrower and a co-borrower are refinancing a home that they both occupy, at the closing -
who must receive a copy of the rescission disclosure?
Both Borrowers
If a loan is a refinance, and the loan is improperly closed and funded in one day with no three day
rescission period, how long do the borrowers have to rescind the transaction?
3 Years
What is not included in the APR calculations?
- Mortgage insurance premium
- Origination fee
- Processing fee
- Hazard/Fire insurance premium
Hazard/Fire Insurance Premium
Regulation B allows all of the following except:
- inquiries about the ages of dependents.
- inquiries about citizenship and residency status.
- inquiring about receiving child support and/or alimony.
- None of the above
inquiring about receiving child support and/or alimony.
If an applicant has been denied credit, how long does the lender have to get a letter of adverse
action to him/her?
30 days
If the file is inactive, for borrower non-performance a declination letter must be sent within?
30 days
Define “Business day” under the Truth in Lending Act for the three day right of rescission.
- Monday through Friday, except federally related holidays
- Monday through Saturday, except federally related holidays
- Monday through Saturday except legal public holidays
- Any day the mortgage company is open for “business”
Monday through Saturday except legal public holidays
Which property is exempt under RESPA?
- All-cash sales
- Rental property of more than 4 units
- Commercial property
- Property of 25 acres or more (agricultural).
If a home is purchased with an FHA owner-occupied loan, what type of FHA refinance can the
borrower use to refinance?
Streamline
The CHARM booklet was prepared by:
- the CFPB.
- The Dept. of Housing and Urban Development.
- The Federal Housing Administration.
- The Federal Reserve Board.
Federal Reserve Board
The following two disclosures are required by RESPA, if applicable:
- 1003 and AfBA
- LE and AfBA
- 1003 and 1008
- Borrower’s Signature Authorization and GFE
LE and AfBA (Affiliated Business Arrangement)
What determines whether a property is in a flood zone?
Flood Certificate
How long is flood insurance required?
Life of the Loan
Which of the following are functions of FACTA? (Select all that apply)
- To improve consumer access to credit information
- To improve the resolution of consumer disputes with credit agencies
- To prevent identity theft and restore credit history to victims of identity theft
- All of the above
All
What is the objective of FCRA?
To assure fairness, relevancy, confidentiality, and accuracy
Under the FCRA, when must credit reporting agencies delete obsolete information?
Credit Agencies may not report outdated negative credit information.
- Negative credit information stay for 7 Years
- Paid tax liens stay for 7 years, but Unpaid tax liens stay forever
- Bankruptcies more than 10 Years
- Criminal conviction never expire!
Which is the only authorized site for obtaining your free credit report?
- FreeCreditReport.com
- AnnualCreditReport.com
- FreeScore.com
- CreditReport.gov
AnnualCreditReport.com
When is it legal and/or acceptable for the loan originator to provide the consumer with a copy of
his/her credit report?
1.Never
2.When the customer pays for it
3.When the customer requests it
4.When contracts with the credit reporting agency do not prohibit it
When contracts with the credit reporting agency do not prohibit it
Regulation B does which of the following?
- Protects a borrower from fraudulent use of their information
- Requires Upfront Mortgage Insurance on all FHA loans
- Provides equality in the extension of credit
- Regulates advertising of APR
Provides equality in the extension of credit
Who provides the Annual Escrow Account Disclosure Statement?
- The Mortgage Loan Originator
- The Broker
- The Title Company
- The Servicing Lender
Servicing Lender
Which of the following is a purpose of RESPA?
- To regulate interest rates
- To monitor high cost loans
- To eliminate kickback and referral fees
- To track real estate settlement trends
Eliminate Kickback and referral fees
What is a purpose of the Truth in Lending Act?
To enable consumers to compare the cost of credit from lender to lender
If an advertisement contains TRIGGER TERMS, what must then be disclosed?
- APR only
- APR and payment amount
- Interest rate, term, balance, and APR
- Interest rate, closing costs, and APR
Interest rate, term, balance, and APR
Which of the following is not a prepaid finance charge?
- Origination fee
- Discount point
- Upfront Mortgage Insurance Premium
- Appraisal fee
Apprasial Fee
What is the purpose of HMDA?
- To detect discriminatory lending
- To prevent high cost loans
- To regulate Home Mortgage Appraisals
- To oversee the FHA
To detect discriminatory lending
ECOA prevents discrimination based on:
- Income
- Marital Status
- Location
- Employment
Marital Status
The practice of denying home financing in certain neighborhoods is called:
- Redlining
- Bait and switch
- Dart boarding
- Skimming
Redlining
How long must a brokerage owner keep records?
3 years
A 360/180 best describes what type of loan?
- Subprime
- FHA
- Balloon
- ARM
Balloon Loan
How often must a borrower receive an annual privacy notice according to the GLBA?
Customers must receive a financial institution’s privacy
notice every year for as long as the customer relationship last.
Who regulates the Do Not Call list?
- USDA
- HUD
- FHA
- Federal Trade Commision
FTC
Examples of Red Flags include all of the following except:
- Fraud alert on credit reports
- Documentation which appears altered or forged
- Address discrepancies
- Credit scores
Credit scores
The Patriot Act requires loan originators to:
- check all gift donors against the known terrorist list.
- report suspicious individuals.
- keep records with customer identifying information for years.
- verify citizenship/legal residency before submitting a file to underwriting.
check all gift donors against the known terrorist list.
Which disclosure is due within 3 business days of application?
- Fair Housing Disclosure
- CD
- ECOA Notice
- Servicing Disclosure
Servicing Disclosure. RESPA requires Lender or Mortgage Broker to tell you in writing when you apply for the loan or within the next 3 business days whether it expects that someone else will be servicing your loan.
What is the penalty for Red Flag non-compliance?
$3500
The penalty for non-compliance with the Red Flags Rule is $3,500 maximum in civil fines per violation and up to $2,500 per infraction due to the FTC, notes Identity Theft Awareness
The fastest permissible closing time under MDIA is:
7 business days
Which regulation requires the lender to cancel PMI when the loan reaches 78% LTV?
Homeowners Protection Act
Which regulation is designed to help meet the Credit Needs of the Communities in which it operates?
Community Reinvestment Act
All of the following are true of FHA fixed-rate loans, except:
A Borrowers are only required to carry MIP until the LTV reaches 78%
B They are available in 15- and 30-year terms
C They require upfront MIP on all loans
D Borrowers must make at least a 3.5% investment
(A) The answer is borrowers are only required to carry MIP until the LTV reaches 78%. A borrower with an FHA loan is required to pay both upfront and annual MIP. After June 3, 2013, FHA loans with an LTV less than or equal to 90% will require MIP until the end of the loan term or the first 11 years, whichever comes first. For FHA loans with an LTV greater than 90%, MIP will be required until the end of the loan term or the first 30 years, whichever comes first.
If a borrower is quoted $200 for a termite report and no termite report is required or performed, what must be done?
A. The fee is charged and then credited to the borrower for payment of other settlement costs.
B The fee is deducted from the aggregate amount for the 10% tolerance calculation prior to analyzing the amount for a 10% variance.
C The fee remains as a part of the aggregate amount for the 10% tolerance calculation and is included in the analysis for a 10% variance.
D The fee reverts to the creditor issuing the Closing Disclosure.
The fee is deducted from the aggregate amount for the 10% tolerance calculation prior to analyzing the amount for a 10% variance.
