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Pass the MLO > 500 MLO Flash Cards 2021 > Flashcards

500 MLO Flash Cards 2021

1
Q

What law deals with credit, APR & advertising of consumer loans?

A

TILA/REGULATION Z

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2
Q

Which regulation

prohibits kickbacks?

A

RESPA

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3
Q

Which regulation
requires the lender to
cancel PMI when the loan reaches 78% LTV?

A

HPA – Homeowners Protection Act

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4
Q

Which regulation prohibits fee splitting?

A

RESPA

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5
Q

“X” is the letter used to describe which Regulation?

A

RESPA

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6
Q

RESPA is the acronym used to describe which Law?

A

Real Estate Settlement Procedures Act

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7
Q

What type of mortgage requires a non-refundable funding fee?

A

VA Loan

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8
Q

What is the provision in a mortgage enabling a lender to demand full repayment if the borrower DEFAULTS on the loan?

A

Acceleration Clause

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9
Q

What is the provision in a mortgage enabling a lender to demand full repayment if the borrower TRANSFERS the loan?

A

Alienation Clause

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10
Q

What does CFPB Stand for?

A

Consumer Financial Protection Bureau

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11
Q

What two laws created the CFPB?

A

Dodd Frank Act and Consumer Finance Protection Act

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12
Q

Which regulation is designed to help meet the Credit Needs of the Communities in which it operates?

A

CRA – Community Reinvestment Act

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13
Q

Under ECOA rules and regulations, how many days does the borrower have to request a copy of an appraisal report if the application was denied?

A

90 days

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14
Q

Under ECOA rules and regulations, if an application for credit is denied, and if requested by the borrower -how many days does the lender have to provide a copy of an appraisal report?

A

30 days

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15
Q

If a loan application is APPROVED, under ECOA rules and regulations, when MUST a copy of the appraisal be provided to the borrower?

A

3 business days prior to the loan closing

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16
Q

Conforming Loans follow the guidelines of which regulators?

A

Fannie Mae and Freddie Mac

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17
Q

Which regulation requires the lenders to

“BE EQUAL” when extending credit to borrowers?

A

ECOA – Regulation B

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18
Q

How old must a borrower be to qualify for a Reverse Mortgage?

A

62 Years Old

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19
Q

Which regulation has the primary function of preventing Identity Theft?

A

FACT Act or FACTA

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20
Q

Which regulation has SECTION 114 Rules?

A

FACT Act or FACTA

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21
Q

Which regulation requires the creditor to verify the VALIDITY of any change of address received?

A

SECTION 114 of the FACT ACT OR FACTA

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22
Q

What is the payment method used in a reverse mortgage that allows the homeowners to receive a monthly check while living in the property?

A

TENURE Method

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23
Q

What is the fraud scheme where a borrower uses someone else’s name to purchase the property, but that person WILL NOT be living at the property?

A

Straw Borrower

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24
Q

What type of lender “insures” mortgages?

A

FHA approved lenders

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25
Q

What type of lender “guarantees” mortgages?

A

VA approved lenders and USDA approved lenders

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26
Q

What is the entity that loans money to fund purchases in rural areas?

A

USDA/Dept. of Agriculture

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27
Q

What is the value remaining in property after all liens and debts have been paid?

A

Equity

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28
Q

A borrower is refinancing his home. How much time does Reg Z give him to change his mind (rescind)?

A

3 days

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29
Q

Which Regulation established the 3-day right of rescission rule?

A

TILA/REG Z

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30
Q

Redlining is part of which regulation/Law?

A

Fair Housing Act

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31
Q

Blockbusting is part of which regulation/Law?

A

Fair Housing Act or FHA

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32
Q

Steering is part of which Regulation/ Law?

A

Fair Housing Act

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33
Q

Trying to convince a homeowner to SELL his home by implying that another race/ethnicity is moving in the neighborhood is called?

A

Blockbusting/panic selling

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34
Q

Trying to convince a homeowner to PURCHASE in a particular neighborhood based on his race, religion or ethnicity is called?

A

STEERING

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35
Q

Refusing to make loans on a property in a certain neighborhood for discriminatory reasons is called?

A

Redlining

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36
Q

What does HOEPA stand for?

A

Home Ownership and Equity Protection Act

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37
Q

HOEPA Loans are part of which larger regulation?

A

Reg Z/TILA

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38
Q

High Cost Loans are part of which larger regulation?

A

Reg Z/TILA

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39
Q

High Priced Loans are part of which larger regulation?

A

Reg Z/TILA

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40
Q

Section 32 Loans are part of which larger regulation?

A

Reg Z/TILA

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41
Q

Section 35 Loans are part of which larger regulation?

A

Reg Z/TILA

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42
Q

MDIA ACT is part of which larger regulation?

A

Reg Z/TILA

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43
Q

Mortgage Disclosure Improvement Act is part of which larger regulation?

A

Reg Z/TILA

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44
Q

What is another name for Annual Percentage Rate?

A

Effective Rate

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45
Q

What is another name for Interest Rate?

A

Note Rate or Nominal Rate

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46
Q

PITI divided by Gross Monthly income is referred to as what?

A

Housing Ratio or Front-End DTI

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47
Q

PITI + monthly debt divided by Gross Monthly income is referred to as what?

A

Total Obligation Ratio – Back-end Ratio

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48
Q

How long must TILA Disclosures be kept?

A 
2 years
(exceptions – LE is kept for 3years and CD is kept for 5 years)
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49
Q

What is the maximum amount of time that NEGATIVE info can remain on a credit report?

A

7 years

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50
Q

What is the maximum amount of time that a bankruptcy can remain on a credit report?

A

10 years

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51
Q

Which law/regulation states that a Bankruptcy can only remain on your credit for a MAX of 10 years?

A

FCRA – Fair Credit Reporting Act – Reg V

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52
Q

Which law/regulation states that negative information can only remain on your credit for a MAX of 7 years?

A

FCRA – Fair Credit Reporting Act – Reg V

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53
Q

Which law allows a consumer who has had her credit card used by an identity thief to place a credit freeze on her credit report?

A

FACT ACT or FACTA

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54
Q

Which law requires creditors to TRUNCATE debit and credit card info on receipts?

A

FACT ACT or FACTA

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55
Q

Which regulation requires that loan officers must take measures to secure and dispose of (burn and/or shred) a borrower’s sensitive credit information?

A

FACT ACT or FACTA

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56
Q

Which regulation states that if a borrower is denied credit, he can receive a FREE copy of his credit report?

A

FCRA – Fair Credit Reporting Act

REG V

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57
Q

Which regulation states that if a borrower is unemployed, he can receive a FREE copy of his credit report?

A

FCRA – Fair Credit Reporting Act – Reg V

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58
Q

Which regulation states that if a borrower is on SSI or Disability, he can receive a FREE copy of his credit report?

A

FCRA – Fair Credit Reporting Act – Reg V

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59
Q

Which regulation states that if a borrower has been the victim of fraud, he can receive a FREE copy of his credit report?

A

FCRA – Fair Credit Reporting Act – Reg V

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60
Q

Which regulation states that a

borrower can receive a FREE copy of his credit report once a year (no reason or requirement necessary)?

A

FACT Act Or FACTA

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61
Q

During the loan process, if you ask a borrower if he is single…which law are you violating?

A

ECOA – Regulation B

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62
Q

Which regulation states that the only correct way to ask about a borrower’s martial status is: are you married, unmarried or separated?

A

ECOA – Regulation B

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63
Q

Who is responsible for providing the closing disclosure to the borrower?

A

The Creditor/Lender

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64
Q

Who is responsible for providing the closing disclosure to the Seller?

A

Settlement Agent/Title Agent

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65
Q

Which regulation requires the borrower to receive the Loan Estimate?

A

TILA – REG Z

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66
Q

Which regulation requires the borrower to receive the Closing Disclosure?

A

TILA – REG Z

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67
Q

Which regulation requires the borrower to receive the Loan Estimate within 3 business days?

A

RESPA – Regulation X

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68
Q

Which regulation requires the borrower to receive the Closing Disclosure within 3 business days?

A

RESPA – Regulation X

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69
Q

As it relates to the loan estimate – what is the definition of a Business day?

A

Any day that the Creditor’s office is open for business

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70
Q

According to TILA/REG Z – what is the definition of a Business day?

A

Any calendar day except for Sunday and Legal Holiday

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71
Q

During the loan process, where do you find HMDA government monitoring information?

A

Section 8 of the 1003 application

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72
Q

What does HMDA stand for?

A

Home Mortgage Disclosure Act

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73
Q

What appraisal approach is used when appraising property that has been destroyed by a natural disaster?

A

Cost Approach or replacement cost approach

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74
Q

In the sales comparison approach, how many comps are required?

A

3

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75
Q

What is another name for the Financial Services Modernization Act of 1999?

A

Graham Leach Bliley Act

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76
Q

How many days does a CREDITOR have to notify a consumer of the status of a credit application (denied, approved, need more info)?

A

30 days

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77
Q

Which regulation states that a creditor has 30 days to notify a consumer of an application approval or denial?

A

ECOA – REG B

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78
Q

How many hours of Ethics is required to be taught in the 20hr
Pre-licensing course?

A

3

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79
Q

How many hours of Ethics is required to be taught in the 8hr Continuing Education course?

A

2

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80
Q

How many hours of Federal Law is required to be taught in the 20hr Pre-licensing course?

A

3

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81
Q

How many hours of Federal Law is required to be taught in the 8hr Continuing Education course?

A

3

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82
Q

A mortgage that includes more than one parcel of land is called what?

A

Blanket Mortgage

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83
Q

A mortgage that includes appliances such as a stove or refrigerator is called what?

A

Package Mortgage

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84
Q

Which closing document itemizes the final closing cost and items paid in connection with the loan for the borrower?

A

Closing Disclosure or CD

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85
Q

Which law deals with APR and Advertising of credit terms?

A

TILA – REG Z

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86
Q

What is the official name for the 3/7/3 rule?

A

Mortgage Disclosure Improvement Act or MDIA Act

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87
Q

What regulation requires the lender to perform an escrow analysis?

A

RESPA – REG X

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88
Q

Which law states that it is a violation to discriminate against a potential borrower on public assistance?

A

ECOA – REG B

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89
Q

What two classes are protected under Fair Housing Act - but NOT under ECOA?

A

Disability/Handicap & Familial Status

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90
Q

What three classes are protected under ECOA but NOT under Fair Housing?

A

Age, Marital Status, and Public Assistance

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91
Q

What is another name for a non-conforming loan?

A

Jumbo Loan

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92
Q

What is another name for a Jumbo loan?

A

Non-Conforming Loan

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93
Q

The front Ratio for an FHA loan is 31%… what is the back ratio?

A

43%

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94
Q

The front Ratio for a

Conventional loan is 28%… what is the back ratio?

A

36%

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95
Q

The Ratio for a VA loan is?

A

41%

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96
Q

What is another name for the Bank Secrecy Act?

A

The anti-money laundering act

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97
Q

What is another name for the Anti-Money Laundering Act?

A

Bank Secrecy Act

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98
Q

Which law requires banks (financial institutions) to keep records of deposits of $10,000 made in cash?

A

Anti-Money Laundering Act/Bank Secrecy Act

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99
Q

Which law requires MLOs to file suspicion activity that might be a sign of tax evasion, money laundering, or other possible criminal activity exceeding $5,000.

A

Anti-Money Laundering Act/Bank Secrecy Act

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100
Q

If you fail the test, how long must you wait before retaking the exam?

A

Required 30-day waiting period before retaking a failed test

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101
Q

What does AUS stand for?

A

Automated Underwriting System

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102
Q

What does SAFE Act stand for?

A

Secure & Fair Enforcement Act

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103
Q

What does HERA stand for?

A

Housing & Economic Recovery Act

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104
Q

What does HPA stand for?

A

Homeowner’s Protection Act

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105
Q

What does GLBA stand for?

A

Graham Leach Bliley Act

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106
Q

What type of property is covered under RESPA?

A

1 – 4 unit Residential Property

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107
Q

Which regulation allows lenders to OBTAIN information regarding a
borrower’s ethnicity, to help identify possible discriminatory patterns?

A

HMDA – Regulation C

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108
Q

When can a borrower request cancellation of PMI?

A

When LTV Reaches 80%

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109
Q

When must the lender automatically cancel PMI?

A

When the LTV reaches 78%

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110
Q

What is the primary market?

A

Where borrowers/consumers obtain mortgage loans

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111
Q

What is the secondary market?

A

Where lenders buy & sell loans from one another

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112
Q

Name the two Government Sponsored Enterprises (GSEs)?

A

Fannie Mae Freddie Mac

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113
Q

Which GSE is the Federal National Mortgage Association?

A

Fannie Mae

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114
Q

Which GSE is the Federal Home Loan

Mortgage Association?

A

Freddie Mac

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115
Q

TILA applies when credit is payable by written agreement in __________ installments?

A

More than 4 installments

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116
Q

Which AUS system does Fannie Mae use?

A

Desktop Underwriter (DU)

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117
Q

Which AUS system does Freddie Mac use?

A

Loan Product Advisor (formerly Loan Prospector)

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118
Q

How often must National DNC and

internal DNC list be updated?

A

Every 31 days and records must be maintained for 24 months

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119
Q

An appraisal is valid for _____ months?

A

An appraisal is valid for 6 months (updated 1/1/2020). It must be re-certified if the appraisal will be 4 months (120 days) old or more at closing.

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120
Q

What is the penalty for violating the DNC list?

A

$42,530

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121
Q

What is the penalty for violating the DNC list?

A

$42,530 (use to be)
$43,280 (then was)
$43,792 (2021 Answer)

Be prepared and learn all 3/ know all 3 just in case

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122
Q

Which regulation allows the borrower to sue for 3x’s the amount paid for title insurance?

A

RESPA Section 9

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123
Q

If money was collected, and a borrower rescinds, how long does escrow have to return the funds?

A

20 days

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124
Q

MLOs seeking to become licensed in other states or who seek to move from a bank to a non-bank lender will be allowed ____ days of transitional (temporary) authority.

A

These individuals are allowed to originate loans while completing any state-specific requirements for licensure such as education or testing for up to 120 days while they are applying to the state agency for their new license.

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125
Q

What is the only fee that can be collected prior to delivery of the Loan Estimate?

A

Credit Reporting fee

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126
Q

Once an individual is unlicensed for ________ years as an MLO, most states require that the individual retake the 20hrs of pre-licensing education in order to have his MLO license reinstated.

A

Once an individual is unlicensed for three (3) years as an MLO, most states require that the individual retake the 20hrs of pre-licensing education in order to have his MLO license reinstated.

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127
Q

What law requires that the equal housing lender slogan and/or logo be placed on all advertising?

A

Fair Housing Act

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128
Q

How long does a person have to sue for a violation under the Fair Housing Act?

A

1 year

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129
Q

Once unlicensed for ______ years, the individual must retake and pass the National Exam.

A

Once unlicensed for five (5) years, the individual must retake and pass the National Exam.
If the individual has worked as a registered MLO during this unlicensed period, he is credited for that time.

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130
Q

What is the site where you can receive a free copy of your credit report, according to the FACT Act?

A

www.Annualcreditreport.com

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131
Q

The lender must provide the borrower with a list of then ______ HUD approved counselors.

A

The lender must provide the

borrower with a list of then (10) HUD approved counselors.

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132
Q

What regulation is designed to protect consumer’s non-public information (NPI) and how it can and cannot be shared?

A

GLBA

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133
Q

Which law requires lenders to verify the date of birth, SS# and ethnicity of a person getting a loan in the United States?

A

U.S. Patriot Act

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134
Q

If you fail the test 3 times, what is the waiting period to retest?

A

Six (6) Months/180 days

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135
Q

Under HMDA, how long must a lender keep the Loan Application Register (LAR)?

A

3 years

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136
Q

What day does your license expire each year?

A

December 31st

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137
Q

What is the renewal period to keep your

license current?

A

NOV 1 – DEC 31st

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138
Q

What are the two (2) types of mortgages that require that the homeowner meet with a counselor – to ensure that the he/she understands how the program works.

A

Reverse mortgages &

Higher-Priced (Section 35/HMLS) mortgages.

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139
Q

Which Act requires companies to give consumers privacy notices?

A

Gramm-Leach-Bliley

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140
Q

Which act was implemented to promote

financial stability and to protect consumers from abusive practices?

A

Dodd Frank Act

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141
Q

What is RESPA Section 6 responsible for?

A

Mortgage Servicing

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142
Q

What is RESPA Section 8 responsible for?

A

Kickbacks, Fee Splitting & Unearned fees

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143
Q

What is RESPA Section 9 responsible for?

A

Title Insurance

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144
Q

What is RESPA Section 10 responsible for?

A

Escrow Accounts

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145
Q

What is the max mortgage term (length) allowed for a mortgage to be classified as a Qualified Mortgage?

A

30 years

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146
Q

Until the loan estimate has been delivered, what

fee can a MLO charge?

A

Credit Report

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147
Q

Estimate of charges and terms
for settlement services must be available for at least _________ business days from the time the Loan Estimate is provided?

A

10

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148
Q

If a new (revised) Loan Estimate is required because of a changed circumstance, it must be disclosed and received by the borrower ________ days prior to consummation of the loan?

A

Four (4) days!
The “initial” loan estimate is due at or “within” 3
days of the application.
A “revised” loan estimate is due “within” 3 days of the notice of change.
But in ALL CASES, it must be delivered four (4) days prior to consummation!
Because the soonest a loan can close (per the MDIA Act is 7 days! (3 + 4 = 7)

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149
Q

Flood Insurance must be purchased from the _____________.

A

Flood Insurance must be

purchased from the National Flood Insurance Program (NFIP).

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150
Q

The minimum amount of flood insurance required for a home in a flood zone is $_______.

A

$100,000

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151
Q

The max amount of flood insurance required for a home in a flood zone is $_______.

A

$250,000

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152
Q

The loan estimate must be retained for how long?

A

3 years

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153
Q

What does HMDA stand for?

A

Home Mortgage Disclosure Act

Regulation C

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154
Q

What does NOV stand for?

A

Notice of Value

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155
Q

What does CRV stand for?

A

Certificate of Reasonable Value

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156
Q

What does the “R” stand for in the acronym NMLSR

A

REGISTRY

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157
Q

What is a Mortgage Call Report (MCR)?

A

Quarterly Report required by MLO Company and Mortgage Brokers

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158
Q

Loan originator organizations must keep

compensation records for how many years?

A

3 years

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159
Q

Mortgage companies must submit a residential loan origination activity report to the NMLSR every:

A

Three months (3 months)

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160
Q

Which Act specifically prohibits blockbusting?

A

Th Fair Housing Act

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161
Q

What law protects homeowners from

foreclosure-prevention scams?

A

Mortgage Assistance Relief Services Rule

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162
Q

Which law requires financial institutions to keep detailed records of cash transactions exceeding $10,000 (withdrawing, depositing or transporting).

A

Bank Secrecy Act/Anti-Money Laundering (BSA/AML)

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163
Q

What type of federal report is filed when

financial institutions detect suspicious activity?

A

Suspicious Activity Report

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164
Q

Which law requires businesses to print only the last five card numbers on a
credit card receipt?

A

FACT Act or FACTA

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165
Q

What happens if the acceptable variance

between the Loan Estimate and the Closing Disclosure is exceeded?

A

The excess is refunded to the borrower within 60 days

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166
Q

A higher-priced home loan is one that has:

A

APR exceeds the average prime rate by at least:
• 1.5% for first-lien mortgage
• 2.5% for a first lien Jumbo loan, or
• 3.5% for a subordinate mortgage lien.

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167
Q

What is the shortest time in which a mortgage purchase loan can close?

A

7 business days

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168
Q

Which law states that MLOs are
required to report any suspicious activity exceeding $5,000 that may be a sign of tax evasion, money laundering, or other possible criminal activity.

A

Bank Secrecy Act/Anti-Money Laundering (BSA/AML)

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169
Q

Denise reviewed her credit report and discovered a few discrepancies and would like to dispute them – once disputed, how long does the credit reporting agency have to respond to the dispute?

A

30 days

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170
Q

The Red Flags Rules are also known as

________

A

The Red Flags Rules are also known as Section 114 rules under the FACT Act or FACTA

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171
Q

What law requires ARM borrowers to receive the Consumer Handbook on Adjustable Rate Mortgages?

A

TILA/REG Z

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172
Q

Which law requires that the “Know Before You Owe” booklet be given to the borrower?

A

RESPA

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173
Q

Lenders must maintain an escrow account for higher-priced (Section 35) mortgages for a minimum of:

A

5 years

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174
Q

What is the Fannie Mae appraisal report form?

A

URAR - 1004 Form

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175
Q

What lien has the highest priority and is paid off first when a property is sold?

A

Property Tax

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176
Q

What document is assigned along with the mortgage?

A

Promissory note

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177
Q

What term describes the process of a senior mortgage lien-holder voluntarily changing into a junior mortgage lien-holder?

A

Subordination

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178
Q

What does Ginnie Mae do?

A

Guarantees Ginnie-Mae mortgage-backed securities

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179
Q

Which law requires lenders to train employees to recognize the Red Flags of identity theft?

A

FACT Act or FACTA

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180
Q

Which law entitles a borrower to a copy of his appraisal report?

A

ECOA

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181
Q

According to the GLB Act, a person who completes a single transaction with a creditor is known as a(n) customer or a consumer?

A

A consumer

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182
Q

The lowest possible interest rate for an ARM loan is known as the:

A

Floor

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183
Q

If an applicant works 30 hours every week and is paid $25.00 per hour, what is the applicant’s monthly income?

A

$3,250

$25.00 x 30hrs a week x 52weeks in year / 12

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184
Q

What law prohibits discrimination in the sale & lease of property?

A

Fair Housing Act

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185
Q

The term “20 basis points” expressed as a percentage is:

A

0.20%

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186
Q

The late fee for a conventional loan is:

A

5% of principal and interest

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187
Q

A funding fee is required for a:

A

VA loan

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188
Q

The mortgagee is the:

A

Lender

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189
Q

Who does Fannie Mae hold responsible for the quality of an appraisal?

A

Lender

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190
Q

Which law prohibits discrimination by lenders when extending credit?

A

Equal Credit Opportunity Act /Reg B

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191
Q

A property sold for $200,000

and was appraised at $180,000. The borrower received a loan for $150,000. What is the loan-to-value?

A

83.3% ($150,000/$180,000)

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192
Q

How many days does a lender have to send an adverse action notice?

A

30

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193
Q

The enforcement of a lien is known as a:

A

Foreclosure

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194
Q

What minimum percentage of ownership qualifies an individual as self-employed?

A

25%

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195
Q

Which law defines the right of rescission?

A

Truth-in-Lending

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196
Q

How long after the application date must

social security payments continue to be received in order to count as income?

A

3 years

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197
Q

Which clause in a mortgage allows a lender to increase the interest rate?

A

Escalation

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198
Q

A VA appraisal is known as a:

A

CRV or NOV

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199
Q

Which types of loans are meant for rural areas?

A

USDA – Section 502

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200
Q

The purchase price of a home is $200,000 and the loan amount is $180,000. The borrower pays 6% interest with 1 discount point and 1 origination point. What is the cost of the points?

A

$3,600 ($180,000 x 2%)

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201
Q

What is the maximum allowable amount of VA seller concessions?

A

4%

202
Q

The late fee for a VA loan is:

A

4% of principal and interest

203
Q

What is the clause in a mortgage that is also known as a “due on sale” clause?

A

Alienation

204
Q

Alimony payments must continue to be received for how long after the application date if they are to be included as income?

A

3 years

205
Q

Credit reports are good for how many days after they are pulled for qualifying purposes?

A

120

206
Q

Which law protects an individual’s confidential information?

A

Gramm-Leach-Bliley Act

207
Q

The Mortgage Servicing Disclosure Statement must be sent to the borrower within how many business days of receiving a loan application?

A

3

208
Q

After an escrow account analysis, money must be refunded if the over-paid amount equals or exceeds:

A

$50

209
Q

The maximum escrow cushion that a lender can require is:

A

Equal to 2 months (1/6th)

210
Q

The fluctuating economic indicator used in an ARM is the?

A

INDEX

211
Q

The Home Mortgage Disclosure Act (HMDA) was implemented by the:

A

Federal Reserve Board

212
Q

Tax liens can be kept in the credit report for?

A

7 years

213
Q

The range of possible credit score is:

A

300-850

214
Q

The Red Flag Rule is concerned with:

A

Identity theft

215
Q

Which type of mortgage is funded by the United States Department of Agriculture?

A

Section 502 loans/USDA Loans

216
Q

What type of mortgage

requires that the lender provide the borrower with the CHARM booklet?

A

Adjustable Rate Mortgages

217
Q

For how many years must a lender retain the Escrow Cancellation Notice?

A

2

218
Q

For how many years must a lender retain the Partial Payment Policy?

A

2 years

219
Q

The mortgagor is the:

A

Borrower

220
Q

Which law (regulation) is designed to create financial stability?

A

The Dodd Frank Act

221
Q

Which appraisal approach is BEST for appraising vacant land, new construction or for unusual or special purpose?

A

Cost Approach

222
Q

What establishes the lien position?

A

Date and time of recording

223
Q

What type of mortgage has a fixed interest rate and increasing payments?

A

Growing equity mortgage

224
Q

A graduated payment mortgage:

A

Has payments that start low and increase over time

225
Q

If there is no minimum monthly credit card payment, what percent of the balance is used in the calculation of monthly debt?

A

5%

226
Q

The Fannie Mae Total Obligations Ratio (back-end ratio) is:

A

36%

227
Q

A borrower is paid $3,500 bi-weekly – what would be considered the gross monthly income?

A

$7,583.33
$3,500 x 26 ÷ 12 =
$7,583.33 per month

228
Q

Company or individual who, for a fee, places loans with lenders, but does not service such loans is called a ___________?

A

Mortgage Broker

229
Q

Fannie Mae generally wants how many months of liquid financial reserves after closing?

A

2 months

230
Q

The Penalty for Mortgage Fraud is ___________.

A

$1,000,000 or imprisoned not more than 30 years, or both.

231
Q

A co-borrower whose income is used to qualify must sign the:

A

Mortgage and the note

232
Q

Which form is used to summarize the information in the loan package on a FHA loan?

A

Fannie Mae 1008 – Transmittal Summary

233
Q

An appraisal must be re-certified if it is older than:

A

4 Months

234
Q

The most probable price which a property should bring in an open market is:

A

Market Value

235
Q

The appraisal approach that best applies to vacant land is:

A

Sales Approach

236
Q

The appraisal approach that best applies to a school is:

A

Cost Approach

237
Q

Who handles complaints regarding mortgage loan rejections?

A

CFPB

238
Q

What gives someone other than the owner the right to be on the property for a specific purpose?

A

Easement

239
Q

What is a clause in the deed that limits the future use of a property?

A

Deed Restriction

240
Q

The most common type of legal description for residential subdivisions is:

A

Lot and block

241
Q

The most accurate type of legal description for residential subdivisions is:

A

Metes and bounds

242
Q

What type of funding occurs when a lender obtains funds from a line of credit at a commercial bank?

A

Warehouse funding

243
Q

The late fee for FHA and VA loans is:

A

4%

244
Q

When a lender sells a mortgage loan to another lender this is called:

A

Assignment of mortgage

245
Q

What type of mortgage fraud scam occurs when a buyer borrows the down payment from seller without the lender’s knowledge?

A

Silent second

246
Q

What can result in a $1,000,000 fine and 30 years in prison?

A

Acts of mortgage fraud

247
Q

After loan servicing is transferred, the new servicer cannot assess late fees for a period of ____ if the payment is made to the previous lender by mistake:

A

60 days

248
Q

Which document is used in place of a mortgage to secure the payment of a promissory note? (This method is used in many states.)

A

A deed of trust

249
Q

“APR” means…

A

Annual percentage rate. This is the cost of credit expressed as a percentage.

250
Q

A Reconveyance Clause is:

A

The method used to transfer title for a property following full payment of a loan. Reconveyance is typically used with deed of trust.

251
Q

A Subordinate lien is:

A

The same as a second mortgage. It may also be called a junior lien.

252
Q

What is a mortgage?

A

A legal document that connects a promissory note with the collateral used to secure the note.

253
Q

A deed is:

A

A legal instrument that conveys title to real property.

254
Q

An amortization schedule is:

A

A table providing the periodic payments needed to pay off a loan by the end of its term. The payments include principal and interest.

255
Q

Qualified mortgages may not have Back-end DTI exceeding:

A

43%

256
Q

What is a note?

A

A legal document that obligates a borrower to repay a loan. It specifies the terms by which the repayment will occur. It may also be called a promissory note.

257
Q

VA underwriters use a debt ratio of:

A

41%

258
Q

Discount points are paid to?

A

The lender at closing to reduce the note rate of the loan

259
Q

Securitization is used to?

A

Pool similar types of loans to create mortgage-backed securities for sale on the financial market. These securities are used to create a renewable source of funds for lenders.

260
Q

When does “Dry Settlement” occur?

A

Parties meet to execute documents, but funds are not disbursed.

261
Q

When does “Wet Settlement occur”

A

Parties meet to execute documents and funds are subsequently disbursed.

262
Q

Name four (4) involuntary liens that could be filed on a property.

A

Tax liens Mechanics liens Judgements Attachments

*JMAT

263
Q

What type of lien is a voluntary lien on property?

A

A mortgage is a voluntary lien

264
Q

What is the definition of “Real Property”?

A

Land and anything that is permanently affixed to it.

265
Q

Tom Brown is a nurse at the local hospital. He has worked the night shift for three years and plans to continue this schedule. His base pay is $29.50 per hour with a 5% shift differential. He averages 35 hours per week. What is his qualifying income?

A

Answer: C.
• Calculate the shift differential first: $29.50 * 5% = 1.475.
• So he gets an additional $1.475 per hour.
• So, $1.475 + $29.50 = $30.975. $30.975 * 35hrs x 52weeks / 12 = $4,697.87

266
Q

If the purchase price is

$300,000 and the loan amount is $250,000 and the appraisal value is $275,000…what is the LTV?

A

90%

250,000/275000

267
Q

Suppose the payment is late on a
conventional loan and the monthly principal is $1,000, the monthly interest is $500, the monthly taxes are $125 and the monthly insurance is $25.00…what is the amount of the late payment?

A

$75 ($1,500 x 5%)

* Remember – late charges are not calculated on the taxes and insurance!

268
Q

Suppose the payment is late on a FHA loan and the monthly principal is $1,500, the monthly interest is $150, the monthly taxes are $105, the MIP is $210 and the monthly insurance is $33.00…what is the amount of the late payment?

A

$66

$1,500 + $150 x 4%

269
Q

Monthly PITI payments are $1,400 and the borrower’s gross monthly income is $5,000. His other debts are $200 a month. What is the Housing Expense Ratio?

A

28% ($1,400 ÷ $5,000)

270
Q

Monthly PITI payments are $1,400 and the borrower’s gross monthly income is $5,000. His other debts are $200 a month. What is the Debt to Income Ratio?

A

32% ($1,400 + $200 ÷ $5,000)

271
Q

What type of property is NOT covered by RESPA rules and regulations?

A

All cash sales, rental units of more then 4, property 25 acres or more & commercial property.

272
Q

According to RESPA Section 6 - a servicer must make contact with a borrower after how many days of a missed payment?

A

36 days

273
Q

A lender/servicer must inform the borrower of the available loss mitigation options after _____________ days of
missed payments?

A

45 days

274
Q

Which regulation allows the borrower to sue for “treble” damages?

A

RESPA Section 9

275
Q

What law requires the lender to provide an annual summary of the activity associated with the borrower’s impound account?

A

RESPA Section 10

276
Q

The servicing transfer statement must be provided to the borrower ___________ prior to transfer.

A

15 days

277
Q

What are the six (6) items that make a “complete” application?

A

Borrower name, Social Security Number, Subject Property address, Borrower’s monthly income, estimated value amount and the loan amount.

278
Q

The “Know Before You Owe” disclosure must be provided within ____________ days of a complete application?

A

3 days

279
Q

The “Know Before You Owe” disclosure must be provided for what type of transactions?

A

Purchase Only

280
Q

If the application is withdrawn within the first _________ days or the lender declines the application within the first _________ days, the lender is NOT required to provide the ____________ to the borrowers.

A

3,3, initial disclosure

281
Q

________________ occurs if the lender chooses the hazard insurance company when the borrower allows the policy to lapse.

A

Forced-placed insurance

282
Q

Which items have a zero (0) tolerance between the Loan Estimate and the Closing Disclosure?

A

Real estate transfer taxes, loan origination fees, interest rates, appraisal and credit report

283
Q

Which items have a 10% tolerance between the Loan Estimate and the Closing Disclosure?

A

Government recording fees, title insurance

284
Q

On what document would you find

information regarding the “RATE LOCK”?

A

The Loan Estimate ONLY

285
Q

What is the penalty for violating RESPA?

A

$10,000 and/or up to 1-year in jail

286
Q

Which Regulation is Regulation “Z”?

A

Truth In Lending Act (TILA)

287
Q

Which disclosure requires that entities that purchase or acquire mortgage loans to notify the borrower and provide the name, address and telephone number of the new owner within 30 days of acquisition?

A

Transfer of Ownership Disclosure

288
Q

The total “interest” being charged on the loan, expressed as a percentage is known as the ____________________?

A

Total Interest Percentage (TIP)

289
Q

If a borrower was not properly notified of his/her right to rescind, how long can the rescission period be extended?

A

Three (3) years

290
Q

How many copies of the “Right to Rescind” must each borrower receive?

A

2 (two)

291
Q

What law requires that the borrower receive the Right to Recession notice?

A

TILA (Reg Z)

292
Q

What does APOR stand for?

A

Average Prime Offer Rate

293
Q

When is a loan considered a Section 32 (High Cost) Loan?

A

A loan will be considered a High Cost (Section 32) loan if its APR exceeds the APOR by more than 6.5% for a first lien or 8.5% for a subordination lien, or when the total points and fees payable in conjunctions with the loan exceed 5% (8% for loans of $20,000 or less).

294
Q

When is a loan considered a Section 35 (High priced) Loan?

A

A loan will be considered a High Priced (Section 35) loan if it’s APR exceeds the APOR by more than 1.5%, 2.5% for jumbo first-lien loans and 3.5% for subordinate liens.

295
Q

What type of loans “require” an impound account?

A

Section 35 High Priced Loan

296
Q

When is the CHARM booklet required?

A

When the consumer received an adjustable rate mortgage

297
Q

What is the regulation/rule that states that a loan originator cannot receive Dual Compensation?

A

Loan Originator compensation rule

298
Q

Which law states that a loan originator can only be paid a commission by one source, either the borrower or the lender – but not both?

A

Loan Originator compensation rule

299
Q

If a lender issues a Qualified Mortgage, it is assumed that the borrower has satisfied what rule?

A

The Ability-To-Repay (ATR) rule

300
Q

What is the max debt-to-income ratio allowed for a mortgage to be considered a qualified mortgage?

A

43%

301
Q

What is the max term (length) allowed for a mortgage to be considered a qualified mortgage?

A

30 years

302
Q

What is the max debt-to-income ratio allowed for a mortgage to be considered a qualified mortgage?

A

43%

303
Q

What type of mortgage is not allowed to have toxic features such as: interest only, negative amortization, no income/no asset income qualifications or prepayment penalties?

A

Qualified Mortgage

304
Q

What law are you violating if you ask a borrower (on a credit application) if he or she is planning to have any more kids in the future?

A

ECOA – Reg B

305
Q

What law states that married spouses can keep separate credit bureau files, if requested?

A

ECOA (REG B)

306
Q

Which law states that if a Loan Originator is taking an application “face-to-face” he/she must complete the Government Monitoring Section (Section 8) of the 1003 application?

A

ECOA (REG B)

307
Q

Which law states that an adverse action notice (denial) must be in writing?

A

ECOA (REG B)

308
Q

If an applicant receives an adverse action notice – he can request a statement of “more specific” reason within ______________ of receipt of the notice?

A

60 days

309
Q

ECOA states that creditors cannot discriminate against the __________ of the borrower’s income, however, they can discriminate against the _____________ of the borrower’s income.

A

Cannot discriminate against the source, however can discriminate against the amount.

310
Q

How long must ECOA records be kept?

A

25 months

311
Q

How long does a consumer have to sue for a violation under ECOA?

A

24 months

312
Q

Which law states that a borrower is entitled to receive a free copy of his credit score once a year?

A

None. Credit “score” is never free

313
Q

How long do “unpaid” taxes appear on a credit report?

A

Forever

314
Q

How long does a judgment appear on a credit report?

A

7 years

315
Q

If a consumer has questions regarding his/her application, who should be contacted?

A

The lender

316
Q

If a consumer has questions regarding his/her credit scores, who should be contacted?

A

The credit reporting agency(ies)

317
Q

If a consumer is denied credit, what law states that the credit must provide the name, address, and telephone number of the credit reporting agency used to make the decision?

A

FCRA – Regulation V

318
Q

What law requires lenders to provide the borrower with the National Credit Score Disclosure, which informs him/her of which credit score was used to approve the mortgage loan?

A

FACT Act or FACTA

319
Q

What law is the loan originator violating if he leaves the clients file on his desk at the end of the day?

A

FACT Act or FACTA

320
Q

If a consumer’s file is no longer needed, what is the proper way to dispose of it?

A

Burn or Shred it

321
Q

What law requires lenders to file monthly reports regarding the ethnicity, race, and sex of all applicants?

A

HMDA – Regulation C

322
Q

An individual who obtains or has obtained a financial product or service from financial institution for person, family or household reasons is referred to as a ______________________according to the GLBA Act?

A

Consumer

323
Q

An individual/consumer with a continued relationship with a financial institution is referred to as a _______________ according
to the GLBA Act?

A

Customer

324
Q

Gaining information under false pretense is referred to as ____________ under the GLBA?

A

Pretexting

325
Q

According to the DNC list, telemarketers (including loan originators) must search the national DNC list ever _______________ days.

A

Every 31 days

326
Q 
A SAR (suspicious activity report) must be filed by a mortgage loan originator (MLO) when a person engages in suspicious activity of $\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_ or
more?
A

$5,000

327
Q

Which law increases the ability of law enforcement agencies to search telephone, email, medical and financial records of consumers?

A

USA Patriot Act

328
Q

Which law is responsible for the establishment of the anti-money laundering act?

A

USA Patriot Act

329
Q

Which law was established to identify and prevent redlining?

A

Home Mortgage Disclosure Act (HMDA)

330
Q

How long must commercial advertising records be kept?

A

2 years

331
Q

What law was created to prohibit money laundering and financing of terrorist?

A

USA Patriot Act

332
Q

What is the name of the document that indicates the amount that the Veteran is entitled to?

A

Certificate of Eligibility (COE), which shows the amount of his entitlement.

333
Q

What is the maximum flat fee that a lender can charge for a VA loan to cover lending cost?

A

Lender may charge a flat fee, up to 1% of the loan amount, to cover the lender’s costs.

334
Q

An abusive practice in which a loan is refinanced without any tangible net benefit to the borrower is called?

A

Loan Flipping

335
Q

FHA imposes restrictions requiring the borrower not to resale the property for the first _________ days.

A

90 days

336
Q

FHA requires the lender to investigate the transfer history of property for the _______________ before resale, in an attempt to identify potential flipping schemes.

A

Three years (3yrs)

337
Q

What type of loans have PMI (Private Mortgage Insurance)?

A

Conventional loans where the borrower puts less than 20% down payment

338
Q

What type of loans have Up Front Mortgage Insurance Premium?

A

FHA Loans

339
Q

In a conventional loan,

how much of the down payment must come from the borrowers own (personal) funds?

A

5% of the down payment

340
Q

What does the Debt Services portion of the monthly payment include?

A

Debt Services includes the principal and interest portion only (P&I)

341
Q

What is a HECM?

A

Home Equity Conversion Mortgage (aka) a FHA reverse mortgage

342
Q

When is a reverse mortgage due?

A

Borrowers dies, sells the home, or cease to live in the home for 12 consecutive months

343
Q

What type of mortgage is it when the borrower is not required to make a payment, but the balance of the loan rises and the equity shrinks?

A

Reverse Mortgage

344
Q

What type of mortgage is it when the balance continues to grow, even though the borrower is making the full payment each month?

A

Negative amortization

345
Q

A type of seller financing in which the
seller finances enough money to cover the existing loan balance as well as any additional funds needed from the borrower is called a __________________.

A

Wraparound mortgage

346
Q

What type of mortgage is also called a self-liquidating mortgage and is designed to pay off the entire balance at the end of the loan?

A

Fully-amortized mortgage

347
Q

A mortgage that is a combination of fixed and adjustable. For example, 5/25 – is known as a __________________
mortgage?

A

Hybrid Mortgage

348
Q

A written instrument used to convey title or transfer ownership?

A

Deed

349
Q

The document that protects the homeowner against defects that occurred in the past, such as undisclosed liens, heirs, fraudulent documents, etc. is called ____________________?

A

Title insurance

350
Q

A _________________ loan is a short-term cash out loan made on the equity in the applicant’s current property in order to allow them to close on the purchase of a new transaction.

A

Bridge loan

351
Q

The area medium income (AMI) cannot exceed __________ in order to be approved for a USDA/Section 502 loan?

A

115%

352
Q

What type of loan program provides 100% financing in rural or farm communities/areas?

A

USDA Loans

353
Q

If a credit report doesn’t show the required minimum payment amount, the lender must use ___________________ for underwriting purposes?

A

5% of the outstanding balance

354
Q

If a borrower rents a room for $1,500 a month, how much would the underwriter count as income?

A

$1,125.00

$150,000 x 75% = $1,125

355
Q

If a borrower receives $1,500 a month child support income, how much would the underwriter count as income?

A

$1,875.00

$1,500 x 1.25% = $1,875

356
Q

If a borrower receives $1,200 a month SSI income, how much would the underwriter count as income?

A

$1,500.00

$1,200 x 1.25% = $1,500

357
Q

Calculate 3 points if the loan amount is $500,000 and the sales price is $525,000.

A

$15,000

$500,000 x 3% = $15,000

358
Q

On a conventional loan where the borrower is making a down payment of $20,000, how much of the down payment must be from the borrower’s own funds?

A

$1,000
5% of the down payment must be from the borrower’s own funds.
$20,000 x 5% = $1,000

359
Q

An individual that meets the definition of a loan originator, but works for a bank is called a ___________________?

A

Registered Loan Originator

360
Q

To be approved as a Loan Originator, a licensee must not have been found guilty of any felony in the past ____________ years.

A

7 years

361
Q

The only exception to a person being granted a license if he/she has been found guilty of a felony in the past 7 years (or if the felony deals with money crimes) is if he/she has received a __________________.

A

Pardon

362
Q

What are the three (3) protection options each state must have in place for loan originators?

A

Minimum net worth, surety bond or reserve account

363
Q

What is the penalty for violating the safe act?

A

$28,474 as of January 12, 2018 (previously $25,000)

364
Q

When must the borrower receive the Initial Escrow Account Disclosure?

A

Within 45 days after the closing date (if it was not received at closing)

365
Q

When must the borrower receive Affiliated Business Arrangement Disclosure (afba)?

A

When the referral is made (immediately) if not then, prior to doc signing.

366
Q

When must the borrower receive the Privacy Policy Notice?

A

At first contact, and thereafter, once a year as long as he/she remains a customer

367
Q

An applicant is purchasing a home for $100,000 utilizing FHA financing. The home appraises for $98,000. What is the minimum dollar amount that the borrower must contribute as a down payment on this transaction?

A

$98,000 x 3.5%

368
Q

How long would an unpaid tax lien remain on a consumer’s credit report?

A

Forever

369
Q

What is the penalty for knowingly violating the TRID rules?

A

1,000,000 per day

370
Q

What are the two agencies that created the NMLS System?

A

AARMR and the CSBS

American Association of Residential Mortgage Regulators and the Conference of State Bank Supervisors

371
Q

Mary wants to obtain FHA insured financing on her primary home. Her housing expense will be $800.65. She also has the following debt: $192.65 (auto payment) and $40 (credit account). Based on her debt, what would be Mary’s required stable monthly income to qualify for this loan using the total debt-to-income ratio?

A

$2,403.02.
You MUST know the ratios for FHA to do this problem. The back-end (total DTI) for FHA is 43%.
$800.65 + 192.65 + $40 = $1,033.30 $1,033.30/43% = $2,403.02

372
Q

For an ARM, an introductory rate that is lower than the fully indexed rate at the time of closing is called a _________ rate?

A

Teaser Rate

373
Q

According to the TRID Rules, if the Closing Disclosure is mailed to the borrower, when is it considered received?

A

Three (3) days after it was mailed/sent

374
Q

What is the formula for calculating the CLTV?

A

1st Mortgage + 2nd Mortgage ÷ the sales price or appraised value (whichever is lower)

375
Q

What is the monthly PMI on a 90% LTV loan for a property valued at $500,000 if the monthly PMI factor is .60%?

A

$225.00

$500,000 x 90% x .60% ÷ 12

376
Q

Harold is refinancing his home. The property appraised for $260,000, and Harold’s loan amount is $195,000. What is the Loan-to-value for this transaction?

A

75%

377
Q

What is the penalty when a loan applicant makes a false statement on the 1003?

A

May face a five-year jail term

378
Q

3/1, 5/1, 7/1 and 10/1 ARMs; these are examples of what types of mortgage?

A

These are adjustable rate mortgages, in which, rate is fixed for three year, five year, seven year and 10 year periods, respectively, but may adjust annually after that. Also called Hybrid ARMS

379
Q

What is the official name for the 1003 form?

A

Form 1003 is also known as the Uniform Residential Loan Application (URLA).
Freddie Mac also uses the same application form and is known as the Freddie Mac Form 65.

380
Q

What is a 1031 Exchange?

A

A tax deferred exchange of “like” real estate, used to offset or avoid capital gain tax.

381
Q

What is the name of the form that the IRS uses to retrieve past tax returns, W-2, and 1099 transcripts that are on file with the IRS?

A

4506-T FORM

382
Q

What documents is a summary of recorded transactions, concerning a particular property?

A

Abstract of title

383
Q

What is the clause/condition in a mortgage that gives the lender the right to require immediate repayment of the loan balance if regular mortgage payments are not made or for breach of other conditions of the mortgage?

A

Acceleration Clause

384
Q

Interest earned but not yet paid is called what?

A

Accrued Interest

385
Q

What is included in Acquisition Costs?

A

Purchase price, plus closing costs, minus seller credits.

386
Q

What type of mortgage, is a mortgage in which, the interest rate is adjusted periodically based on a pre-selected index?

A

Adjustable Rate Mortgage (ARM)?

387
Q

An opinion of market value as of a specific date is known as what?

A

Appraisal

388
Q

The date that the interest rate changes on an adjustable rate mortgage (ARM) is known as what?

A

Adjustment Date

389
Q

The measurement of the full cost of a loan, including interest and loan fees, expressed as a yearly percentage rate is known as what?

A

Annual Percentage Rate (APR)

390
Q

If there is greater than one percent (1%)
ownership interest of a party in both the business referring out the service and the business receiving the referral, what document is required?

A

Affiliated business arrangement (ABA)

391
Q

Loan payment, divided into equal periodic payments, calculated to pay off the debt at the end of a fixed period, including accrued interest on the outstanding balance is known as what?

A

Amortization

392
Q

What does the Consumer Reporting Agency (or Bureau) do?

A

▪ An organization that handles the preparation of reports used by lenders to determine a potential borrower’s credit history.
▪ The agency gets data for these reports from a credit repository and other sources.
▪ The Big 3: Experian, Equifax and Trans Union

393
Q

What is a Contingency?

A

▪ A condition that must be satisfied, before a contract is legally binding, before a sale can close.
▪ Real estate sales contracts often have a specific date or number of days, in which, the contingencies must be removed.

394
Q

The “When Your Home Is In The Line” disclosure is required by which regulation?

A

TILA – Regulation Z

395
Q

What is a Conventional Loan?

A

A mortgage not insured by FHA or guaranteed by VA.

396
Q

When would a Conversion Clause/Option be used?

A

▪ A provision in an ARM allowing the loan to be converted to a fixed-rate at some point during the term.
▪ Usually conversion is allowed at the end of the first adjustment period.
▪ The conversion feature may cost extra.
▪ Also referred to as a Convertible ARM

397
Q

What is a Conveyance?

A

The transfer of a deed

Or possibly a lease or mortgage.

398
Q

Covenants, Conditions and Restrictions (CC&Rs) are what type of documents?

A

A document defining the use,

requirements and restrictions of a property.

399
Q

What is a Credit Report?

A

A report documenting the credit history and current status of a borrower’s credit standing.

400
Q

How long can a registered MLO, who is transferring from a depository institution, in order to become a state-licensed MLO originate mortgages, prior to completing the 20hr course?

A

120 days Transitional Authority

401
Q

What is a CRV?

A

▪ Certificate of Reasonable Value.

▪ A property appraisal performed by a VA-approved appraiser that established the limit on the principal of the VA loan.

402
Q

When should an ARM disclosure be provided to a borrower?

A

Within three days of the application, whenever an adjustable-rate mortgage transaction is contemplated. (TILA)

403
Q

Who receives the CHARM Handbook?

A

The Consumer Handbook to Adjustable-Rate Mortgages (“CHARM” booklet) must be presented to the consumer within three days of applying for an ARM (adjustable rate mortgage) loan. (TILA)

404
Q

What is an Assessment?

A

A local tax, levied against a property, for a specific purpose, such as: a sewer or street lights.

405
Q

The transfer of a mortgage from one person to another is known as what?

A

Assignment

406
Q

A document showing the financial situation-assets, liabilities and net worth of a person at a specific point in time is known as what?

A

balance sheet

407
Q

What is a Basis point?

A

▪ A unit of measure: 1/100th of one percent
▪ For example, the difference
between a 9.0 percent loan and a 9.5 percent loan is 50 basis points

408
Q

What is a Bi-weekly Payment Mortgage?

A

A plan to reduce the debt every two weeks (instead of the standard monthly payment schedule). There are 26 bi-weekly payments a year

409
Q

What is a Blanket Mortgage?

A

A mortgage that covers more than one parcel of land

410
Q

Bona fide is also known as what?

A

“In good faith” - A “bona fide” offer, is an offer made in good faith.

411
Q

Who’s considered a Borrower (Mortgagor)?

A

The borrower/mortgagor is the one who applies for and receives a loan, in the form of a mortgage, with the intention of repaying the loan in full.

412
Q

What are Caps (Payment)?

A

Consumer safeguards, which limit the amount of change to the interest rate, for an adjustable rate mortgage

413
Q

Who receives a Certificate of Eligibility?

A

The document given to qualified veterans, which entitles them to VA guaranteed loans for homes, business and mobile homes.

414
Q

What is a Certificate of occupancy?

A

Document, issued by local government agency, stating that a property meets the requirements of health and building codes.

415
Q

What is a Certificate of Reasonable Value (CRV)?

A

An appraisal issued by the Veterans Administration showing the property’s current market value

416
Q

What is the Chain of title?

A

The chronological order of conveyance of a property, from the original owner to the present owner

417
Q

What is a Clear title?

A

A marketable title, free of clouds and disputes

418
Q

COFI/Cost of Funds Index is used to calculate what?

A

▪ An index used to calculate the rate of an adjustable-rate mortgage.
▪ The rate adjusts based on a cost-of-funds index often the 11th
District Cost of Funds.

419
Q

What is Combined Loan-to-Value (CLTV)?

A

The ratio of the total mortgage liens against the subject property, to the lesser of either the appraised value or the sales price

420
Q

Conforming Loans are what type of loans?

A

A mortgage loan under the maximum amount of loans that FNMA (Fannie Mae) and FHLMC (Freddie Mac) are legally allowed to buy

421
Q

When are Construction Loans used?

A

A short-term interim loan to pay for the construction of buildings or homes

422
Q

What is the name of the agency who is enforces laws that protect consumers of financial products and services such as mortgages, credit cards and deposit accounts?

A

Consumer Financial Protection Bureau (CFPB)

423
Q

What is a Rate Lock?

A

A commitment issued by a lender, to a borrower guaranteeing a specified interest rate and lender costs for a specified period of time

424
Q

The Real Estate Settlement Procedures Act (RESPA) protects who?

A

▪ A consumer protection law, which
requires lenders to give borrowers advance notice of closing costs/settlement services.
▪ Also known as Regulation X
▪ Memory tool: REXPA

425
Q

What is Real Property?

A

Land and everything, which is Permanently Affixed to it

426
Q

Reclamation is the right of which person?

A

The right of the person, with title to a property, to recover it from the debtor in case of a bankruptcy

427
Q

Reconveyance transfers a property to whom?

A

The transfer of property back to the owner when a mortgage is fully repaid

428
Q

What is a Recording?

A

The act of entering documents concerning title to a property into public records

429
Q

Refinance/Refinancing a loan occurs when?

A

Obtaining a new mortgage loan on a property, already owned, often to replace existing loans on the property

430
Q

Regulation B (ECOA) is also known as what?

A

The equal Credit Opportunity Act.
Makes it 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, or age public assistance program

431
Q

Regulation V (FCRA) regulates what?

A

▪ The Fair Credit Reporting Act.
▪ The Fair Credit Reporting Act (FCRA)
is a United States federal law that regulates the collection, dissemination, and use of consumer information, including consumer credit information.
▪ Memory tool: V= Very Fair

432
Q

Regulation Z (TILA) was designed to promote what?

A

▪ The Truth in Lending Act
▪ designed to promote the informed use of consumer credit, by requiring disclosures about its terms and cost to standardize the manner
▪ Memory Tool: TILA- TILA the GodZilla

433
Q

Rescission gives the homeowner the right to do what?

A

The cancellation of a contract.

434
Q

What is a Reverse Annuity Mortgage (RAM)?

A

▪ A form mortgage, in which, the lender
makes periodic payments to the borrower, using the borrower’s equity in the home as collateral for and repayment of the loan.
▪ More commonly called a HECM (Home Equity Conversion Mortgage)
or simply a Reverse Mortgage.

435
Q

What is a Reverse Mortgage (HECM)?

A

▪ HECM or Home Equity Conversion Mortgage
▪ Reverse mortgages unlock the equity in the home.
▪ Multiple payout options
▪ For borrowers 62+

436
Q

The Safe Act (2008) was designed for what?

A

Secure and Fair Enforcement for Mortgage Licensing Act
The S.A.F.E. Mortgage Licensing Act is designed to enhance consumer protection and reduce fraud by encouraging states to establish minimum standards for the licensing and registration of state-licensed mortgage loan originators.

437
Q

Who issues a Satisfaction of Mortgage?

A

▪ The document is issued by the mortgage company when the mortgage
loan is paid in full.
▪ Also called a “release of mortgage.”

438
Q

What is a Second Mortgage?

A

A mortgage made subsequent to another mortgage and subordinate to the first one

439
Q

Who’s part of the Secondary Mortgage Market?

A

▪ The market, into which, primary
mortgage lenders sell the mortgages they make to obtain funds to originate more new loans.
▪ This includes investors such as Fannie Mae, Ginnie Mae and Freddie Mac.

440
Q

What is a Security?

A

The property that will be pledged as collateral for a loan

441
Q

A Seller Carry Back is what type of agreement?

A

An agreement in which the owner of a property provides financing often in combination with an assumable mortgage.

442
Q

Who is a Servicer?

A

An organization that collects principal and interest payments from borrowers and manages the borrower’s escrow accounts

443
Q

What is Servicing?

A

All the steps and operations a lender performs to keep a loan in good standing, such as collection of payments, payment of taxes, insurance, property inspections and the like.

444
Q

What are Settlement/Settlement Costs?

A

▪ Expenses over and above the price of the
property that are incurred by buyers and sellers when transferring ownership of a property. Also called Closing Costs.
▪ Closing costs normally include an originator fee, property taxes, charges for title insurance
and escrow costs, appraisal fees, etc.
▪ Closing costs will vary according to the area country and the lenders used.

445
Q

Who creates Sweat Equity?

A

Equity created by a purchaser performing work on a property being purchased

446
Q

A Tax Lien is a claim against what?

A

A claim against a property for unpaid taxes

447
Q

What is a Tax Sale?

A

Public sale of property, by a government authority, as result of nonpayment of taxes

448
Q

A Title shows what?

A

A document, which gives evidence of an individual’s ownership of property

449
Q

A Total Expense Ratio (back-end ratio/total debt ratio) includes what?

A

Total obligations (PITI + all debt) divided by the gross monthly income –expressed as a percentage.

450
Q

What is the law that requires that the Annual Percentage be disclosed to a home buyer, shortly after they apply for the loan?

A

TILA

Also known as Regulation Z. Memory tool: TILA the GodZilla

451
Q

Evaluating a loan application package and making the decision, whether to make a loan to a potential home buyer, based on credit, employment, etc is a process known as?

A

Underwriting

452
Q

What federal legislation allows the borrower to challenge the value stated in an appraisal report?

A

ECOA – Regulation B

453
Q

Pretexting is prohibited based on what law/regulation?

A

GLBA

454
Q

Which regulation states that it is a violation to discriminate against a borrower who’s only income is social security benefits?

A

ECOA

455
Q

What is a Deposit/Earnest Money Deposit?

A

▪ Cash paid when a formal sales contract is signed.
▪ The deposit is usually held by a third party until the sale is
complete.

456
Q

Depreciation happens when?

A

When the value of property declines

457
Q

What are Discount Points?

A

Prepaid interest assessed at closing by the lender. Each point is equal to 1 percent of the loan amount (e.g. two points on a $100000 mortgage would cost $2000).

458
Q

What was the purpose of the Dodd-Frank Act?

A

Purpose:
Answer 457:
1. To promote financial stability
2. To end “too big to fail”
3. To protect taxpayers by ending bailouts
4. To protect consumers from abusive practices
Established the Consumer Financial Protection Bureau (CFPB)

459
Q

Which law requires notification to the borrower before the servicing of the loan is transferred to someone else?

A

RESPA

460
Q

What’s an Encumbrance?

A

▪ A legal right or interest in a property that affects title and
lessens the property value.
▪ Encumbrances can take the form of
claims, liens, unpaid taxes and so on.

461
Q

The value remaining in property after all liens and debts are considered is known as what?

A

EQUITY

462
Q

What type of ARM allows the borrower to change from an adjustable rate mortgage to a fixed rate mortgage?

A

CONVERTIBLE ARM

463
Q

The FACT Act (2003) was an amendment to what earlier law?

A

▪ Fair and Accurate Credit Transactions Act amended Fair Credit Reporting Act (Reg V).
▪ The act allows consumers to request and obtain
a free credit report one every twelve months from each of the three nationwide consumer credit reporting companies.
▪ The act also contains provisions to help reduce identity theft.

464
Q

A veteran’s entitlement for a VA loan is specified in what document?

A

The Certificate of Eligibility (COE) is the document issued by the VA that specifies the amount of loan guarantee for which the veteran is eligible

465
Q

The APR on a Loan Estimate for a 30-year fixed-rate loan is 6.25% and the APR on the Closing Disclosure is 6.5%. After redisclosure, the borrower must wait ___________ to close the loan.

A

THREE BUSINESS DAYS

466
Q

According to the GLB Act, an individual who obtains or has obtained a financial product or service from a financial institution is known as a what?

A

CONSUMER

467
Q

If Martin sells his home five months after purchasing the property, the sale price must exceed Martin’s acquisition cost by more than _____ to require a second appraisal.

A

20%
A seller who acquired a home within six months of resale and is selling the home for more than 20% of the original acquisition cost must have a second property appraisal performed on the property.

468
Q

What is the Federal Reserve?

A

▪ The central bank of the United
States and major regulatory agency for many commercial banks.
▪ Commonly referred to as “The Fed”.

469
Q

Fee simple is what type of ownership?

A

Absolute ownership of real property

470
Q

What is a written agreement between lienholders on a property that changes the priority of mortgages, judgments, and other lien?

A

A subordination agreement is a written agreement between lienholders on a property that changes the priority of mortgages, judgments, and other liens.

471
Q

What is a First Mortgage?

A

The primary lien against a property

472
Q

A Fixed Rate (Mortgage) has what type of interest rate?

A

An interest rate is fixed for the term of the loan

473
Q

Flood Insurance is what type of insurance?

A

A form of hazard insurance required by lenders to cover properties in flood zones

474
Q

What is FNMA?

A

▪ The Federal National Mortgage Association is a secondary
mortgage institution.
▪ FNMA buys VA, FHA and conventional mortgages from
primary lenders.
▪ Also known as “Fannie Mae.”

475
Q

What is Forbearance?

A

Grace period given when a lender

postpones foreclosure, to give the borrower time to catch up on overdue payments.

476
Q

Foreclosure is known as?

A

▪ A legal process, by which, the
lender or the seller forces a sale of a mortgaged property, because the borrower has not met the terms of the mortgage.
▪ Also known as a repossession of property.

477
Q

Freddie Mac is a nickname for who?

A

The nickname most commonly used for the Federal Home Loan Mortgage Corporation

478
Q

A Fully Amortized ARM is what type of rate?

A

An adjustable rate mortgage (ARM) with a monthly payment that is sufficient to amortize the remaining balance at the interest accrual rate over the amortization term.

479
Q

Ginnie Mae (GNMA) is also known as what?

A

The nickname most commonly used for the Government National Mortgage Association

480
Q

Government National Mortgage Association (GNMA) is also known as what?

A

▪ Also known as “Ginnie Mae.”
▪ Provides sources of funds for
residential mortgages insured or guaranteed by FHA or VA.

481
Q

A type of flexible payment mortgage, where the payments increase for a specified period of time and then level off is known as __________________.

A

A Graduated Payment Mortgage (GPM)

482
Q

Usury is interest charged when?

A

Interest charged in excess of the legal rate established by law

483
Q

What is a Variable Rate Mortgage (VRM)?

A

Another name for an Adjustable Rate Mortgage (ARM)

484
Q

A document, signed by the borrower’s financial institution (BANK), verifying the status and balance of his/her financial accounts is known as what?

A

A Verification of Deposit (VOD)

485
Q

A document, signed by the borrower’s employer, verifying his/her position, salary overtime, bonuses and the likelihood of continued employment is known as what?

A

A Verification of Employment (VOE)

486
Q

A document, signed by the borrowers servicer, verifying the status of the mortgage is called what?

A

A Verification of Mortgage (VOM)

487
Q

A document, signed by the borrowers landlord, verifying their rental/lease payment history is called what?

A

A Verification of Rent (VOR) / 1007

488
Q

A Margin is added to what to determine the fully-indexed rate?

A

▪ The amount a lender adds to the
index on an adjustable rate mortgage to establish the fully-indexed rate.
▪ The margin is the lender’s profit.
▪ Index + Margin = adjusted interest rate.

489
Q

What is a Marketable Title?

A

A title which is free and clear of liens, clouds or other defects, which would prevent the sale of the property.

490
Q

A Mechanic’s Lien is used when?

A

▪ A mechanic’s lien is a security interest
in the title to property for the benefit of those who have supplied labor or materials that improve the property.
▪ The lien exists for both real property and personal property.
▪ It is considered a cloud on title.

491
Q

MIP (Mortgage Insurance Premium) is purchased by whom?

A

▪ Insurance from FHA, to the lender, against incurring a loss, if the
borrower’s were to default.
▪ Insurance purchased by borrower to insure against default on a FHA
loans.
▪ MIP protects the LENDER

492
Q

A Monthly Housing Expense includes what?

A 
▪ Total monthly expense of principal, interest, taxes, hazard insurance an
mortgage insurance (PITI).
▪ It also includes any HOA (Home Owners Association) dues. (PITIA)
493
Q

What is a Mortgage?

A

A legal document, which pledges a property to the lender as security for payment of a debt

494
Q

The Mortgage Disclosure Improvement Act (MDIA) 2008 amended what?

A

▪ An amendment to Reg. Z.
▪ Requires disclosures (LE) to be sent to the
borrower within three (3) business days after receiving borrowers application.
▪ The loan may not close until after the
seventh (7th) business day after disclosures have been delivered or mailed to the borrower.

495
Q

Who is a Mortgagee?

A

The lender in a mortgage loan transaction

496
Q

What is Private Mortgage Insurance?

A

Money paid to insure the mortgage when the down payment is less than 20 percent

497
Q

Who is a Mortgagor?

A

The borrower or homeowner.

498
Q

What is Negative Amortization?

A

▪ When your monthly payments are not large enough to pay all the interest due on
the loan.
▪ This unpaid interest is added to the unpaid balance of the loan.
▪ If the borrower does not increase
payments, the home buyer will end up owing more than the original amount of the loan.

499
Q

A Non-Conforming Loan cannot be sold to who?

A

▪ A conventional loan that cannot be sold to Fannie and Freddie
Mac.
▪ Often, these loans are larger than the conforming loan amount.

500
Q

A Notice of Default (NOD) is given to who?

A

Written notice to a borrower, that a default has occurred and that legal action may be taken.

501
Q

Question 500:

What is the Office of Comptroller Currency?

A

The federal financial regulatory body, which oversees the nation’s federally chartered banks and savings institutions.

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