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colorado practice test Flashcards

1
Q

Increasing loan balances resulting from the application of periodic payments creates

A

negative amortization

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2
Q

what kind of transaction would a HUD settlement booklet be provided

A

a new home purchase

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3
Q

what form of insurance coverage insure an investor against homeowner default

A

PMI

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4
Q

Colorado Consumer Equity Protection Act established stricter guidelines than federal law

A

HOEPA

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5
Q

Homeowner counseling and borrower education has proven to lead to …

A

minimizing predatory lending issues

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6
Q

Six stage loan cycle begins with

A

origination

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7
Q

What agency is responsible for insuring compliance with the Colorado mortgage Broker registration act

A

DORA

Department of regulatory Agencies

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8
Q

Pre-qualification involves

A

informal review of the borrowers credit

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9
Q

Pre-approval involves

A

formal review

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10
Q

discrimination in mortgage lending address

A

ECOA and the Fair housing Act

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11
Q

What federal regulation governs procedures for handling an incomplete loan application

A

ECOA

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12
Q

What should an originator do if they discover a borrower will repay gift funds

A

inform the lender

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13
Q

Colorado Consumer Caution Disclosure be provided

A

3 days prior to closing

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14
Q

If a loan applications is denied due to information on the applicants credit report which of the following must be included in a notice of the denial

A

statement explaining that the credit reporting agency did not make the decision to deny the consumer credit

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15
Q

What loan processing step would an originator typically take to fulfill the requirements of the Patriot Act

A

obtain a copy of the applicants driver license or other identification

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16
Q

Which disclosure is required under Colorado law to discourage borrowers from accepting a lending agreement with prepayment penalties provisions

A

Loan Product Choice Disclosure

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17
Q

What document would a underwriter rely on for detailed information concerning the collateral for mortgage loan

A

the property appraisal

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18
Q

Which entities has urged Colorado residents to purchase flood insurance

A

FEMA

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19
Q

What gives a mortgagor the right to a property following fulfillment of their obligation to the mortgagee

A

defeasance clause

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20
Q

Property appraisal requirements are established by what federal entity

A

Federal reserve broad

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21
Q

What are two types of title insurance

A

Lenders and owners

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22
Q

Who is responsible for conducting a title search

A

Abstractor

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23
Q

Lenders who are subject to the disclosure requirements of RESPA are regulated by

A

HUD

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24
Q

Mortgage trans action will provide a consumer with opportunity to deduct interest on there income taxes

A

purchasing a home

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25
Q

Colorado, appraiser regulation is found where

A

Chapter 10 of DORA real estate manual

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26
Q

Colorado an appraiser with the designation “Licensed Appraiser” is permitted to appraise non-complex properties with transaction values of no more than

A

$1,000,000

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27
Q

Bankruptcy chapters allows a debtor to completely liquidate their debts

A

chapter 7

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28
Q

Errors and omissions insurance requirement for mortgage brokers in Colorado

A

$100,000 with deductible no greater than $10,000

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29
Q

In Colorado a potential borrower has summited an application and paid fees but the loan does not make to closing, through no fault of the broker what is the most amount of fees that a broker may retain

A

$300

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30
Q

How often must a Colorado mortgage broker license be renewed

A

3 years

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31
Q

What protects a lender from misuse if its funds by the title company

A

insured lender letter

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32
Q

Colorado Mortgage Broker Licensing Act applies to individuals or companies

A

Individuals

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33
Q

What action is required on an FHA loan if the appraiser notes a cosmetic defect on the property

A

no action is necessary

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34
Q

Loan Servicer is responsible for

A
  • maintaining detailed records of the borrowers loan payment
  • disbursing funds from escrow account to pay bills related to the property
  • managing delinquent accounts
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35
Q

Colorado Trustee Foreclosures on a property by what method is the property sold

A

through public sale

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36
Q

What would percentage of owners trigger a ABA disclosure

A

1%

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37
Q

Define mortgage broker

A

Who arranges funding or negotiates mortgage loan for potential borrower and charges a fee for these service

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38
Q

In the state of Colorado what would terminate foreclosure proceedings provide that homeowner makes any past due payments prior to sale

A

Filing an Intent to Cure Notice 15 days prior to the foreclosure

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39
Q

What booklet must be provided to a potential borrower who is specifically shopping for Open-End Financing

A

“When Your Home Is On The Line What You Should know About Home Equity Lines of Credit”

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40
Q

What is the only legal request that can be made of an appraiser

A

Asking the appraiser to consider additional , appropriate property information

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41
Q

True or False
The settlement cost booklet provides the borrower with information on their right to negotiate the terms of a loan and warns them that use of false information on loan application can lead to prosecution for fraud

A

TRUE

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42
Q

When would a Tangible Net Benefit Disclosure be provided in Colorado

A

When the broker is recommending a refinance transaction to a borrower

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43
Q

What mandatory disclosures are due 3 days after application

A
  • GFE GOOD FAITH ESTAIMATE
  • MORTGAGE SERVICE DISCLOSURE
  • HUD SETTLEMENT BOOKLET
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44
Q

TRUE OR FALSE
With such important consumer interests to protect TILA never allows borrowers to accelerate a lending transaction by waiving the right to rescind

A

TRUE

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45
Q

Critics of RESPA feel the GFE is not very helpful in preparing loan applicants to meet the costs of settlement because

A

the estimate of costs provided on the GFE is often significantly lower then the actual costs of settlement

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46
Q

What is the purpose of a loss payee clause on hazard insurance policy

A

it names the lender as payee in the event of property loss

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47
Q

What is USPAP

A

*The uniform standard used by appraisers
*Federal Reserve Broad
THE UNIFORM STANDARDS OF PROFESSIONAL APPRAISAL PRACTICE

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48
Q

What time period does a homeowner in Colorado have to cancel after signing a foreclosure consultancy agreement

A

75 days

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49
Q

Who requires Good Faith Estimate

A

RESPA

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50
Q

How long must a mortgage broker retain records in Colorado

A

4 years following closing

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51
Q

According to Colorado Law under what circumstance may a prepayment penalty be included in a loan covered by the Consumer Equity Protection Act

A

A prepayment penalty may be included if the borrower has the option of choosing a loan without a prepayment penalty

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52
Q

What fees are consider when calculating finance charges

A 
PMI
Mortgage broker fee
origination fees 
discount points 
document preparation
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53
Q

What would begin a non-judicial foreclosure

A

Notice of Election and Demand

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54
Q

The federal agency with authority to bring enforcement action against mortgage broker for violation of Reg Z TILA

A

Federal trade Commission

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55
Q

What federal agency that is responsible for writing the implementing regulations for TILA is

A

The Board of Governors

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56
Q

The Colorado “duty of good faith” requirement mean a broker must do

A
  • Make reasonable inquiry into a borrower current income and obligations
  • Recommend mortgage products that are beneficial to a borrower
  • Make an effort to ensure a borrower can repay the loan
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57
Q

A loan applicant who has been ordered by the courts to make child support payments would list those payments as which of the following on the 1003

A

A Liability

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58
Q

Discount points are used to do what

A

Lower the note rate

59
Q

For what reason do lenders make use of the 1003 mandatory

A

it is required by Fannie Mae and Freddie Mac

60
Q

What may be used to evaluate an applicants income stability

A

Education level
how long been employed at his current job
how long he has been in his current profession

61
Q

the guidelines allowing an affiliated business to receive a return of ownership interest is a part of what federal regulation

A

REG X RESPA

62
Q

Lender is also called “legal terms’

A

Mortgagee

63
Q

Colorado mortgage broker may work as both a broker and a real state
TRUE OR FALSE

A

TRUE

64
Q

Which of the following creates the requirement for uniform settlement disclosure

A

RESPA

65
Q

For purpose of underwriting, Stocks, Bonds, 401k and retirement accounts may only be counted at ___ % of their face value

A

70%

66
Q

What is the required in an agreement for Foreclosure Consulting in the state of Colorado

A
  • Right to rescission
  • Notarizing signatures of all parties to the contract
  • Contract must written in English and accompanied by certified translation into there language spoken to the home owner
67
Q

by providing their signature in section X of a loan application the interviewers is attesting to what

A

That all applicable disclosure have been provided pursuant to the application

68
Q

who obtains the title to a Colorado residence in a foreclosure

A

Equity purchaser

69
Q

comparable sale search prior to appraisal is only needed if

A

it may be requested as needed

70
Q

A mortgage broker recommends a refinance transaction to a borrower will have no tangible net benefit from obtaining the refinance what Colorado requirement has been broken

A

Duty of good faith

71
Q

Is Home Equity Conversation Mortgage tax deductible

A

true

72
Q

Define escrow

A

A statement of the estimated taxes insurance premiums and other charges the borrower will pay from escrow fund during the first 12 months of the loan

73
Q

In the state of Colorado what governs mortgages made for manufactured homes

A

Titles to Manufactured Homes Act

74
Q

According to Colorado law a title company is not allowed to set their own fees for …

A

obtaining a tax certificate

75
Q

The Interagency Guidance on Nontraditional Mortgage Product Risk is

A

A guidance that the federal banking regulatory agencies drafted to ensure that lending institutions do not make nontraditional mortgages without adequate evaluation of the borrower institutional risk management and consumer protection

76
Q

Legal term for a borrower or homeowner in a standard mortgage transaction

A

Mortgagor

77
Q

Colorado Good Fund Law is used to ensure that

A

Loan funding is available at the time of closing

78
Q

Who is responsible for paying the premium for the mortgage title insurance

A

Buyer

79
Q

While waiting for a criminal background check what are Colorado mortgage broker license applicants permitted to do

A

they may apply for temporary license under a sponsoring broker

80
Q

An individual negotiates a loan in the state of Colorado with out license or valid temporary license this individual is guilty of

A

Misdemeanor

81
Q

How long is a temporary broker license valid in Colorado

A

120 days

82
Q

Option ARMs typically recast

A

When the debt reaches 125% of the original amount owed or 5 years

83
Q

How many days does the Department of Regulatory Agencies have to issue or deny a Colorado mortgage broker license

A

21 days

84
Q

If a Colorado mortgage broker increase their fee prior to a loan going to settlement what must occur

A

Provide the borrower with a written explanation

85
Q

Penalties for violation under HOPEA are the same as

A

Truth-in Lending Act

86
Q

What forms of insurance coverage insure a homeowner against damages caused by fire

A

Hazard

87
Q

In lieu of posting a Surety Bond in the sate of Colorado a licensed mortgage broker may do

A

Obtain a business insurance policy

88
Q

When is a Colorado Mortgage broker Compensation Disclosure given to a borrower

A

3 days of application

89
Q

The application fee for licensure under the Colorado Mortgage Broker Licensing Act is

A

$200

90
Q

One of the best question an originator can ask is

A

Does this loan make sense

91
Q

What best describes the purpose of a surety bond for Colorado mortgage broker licensees

A

to ensure a broker has access to funds for compensation of losses

92
Q

When a Colorado mortgage broker enters a lock in agreement with a borrower how long do they have to deliver written agreement confirmation of the agreement

A

3 business days

93
Q

The FBI targets mortgage fraud committed by industry insiders because

A

Fraudulent activity by industry insiders cause the greatest losses to the mortgage lending industry

94
Q

Public support for the enactment of additional laws such the GLB Act to protect the privacy of personal information resulted from

A

the unauthorized and profitable sale of personal information by financial institutions

95
Q

Many States predatory lending laws tend to be different than HOPEA because they

A
  • Cover a broader range of loans
  • create additional disclosure requirements
  • create loan suitability standards
96
Q

Foe mortgage brokers the legal and ethical requirements to protect the nonpublic personal information of a consumers begins when

A

the consumer provides personal information to the broker

97
Q

Individuals and institutions which are exempt from the mortgage broker licensing act must complete a mandatory exemption form
TRUE OR FALSE

A

False

98
Q

A misleading advertisement in Colorado can place a mortgage broker at the risk of enforcement action under what regulation(s)

A

TILA
CPA
FTC

99
Q

Total damages for class action lawsuit pertaining to violations of RESPA section 6 may not exceed

A

1% or $500,000 of the net worth

100
Q

Predatory lending and subprime lending are synonymous terms

true or false

A

False

101
Q

What law contributed to the development of subprime lending market

A

Tax reform act of 1986

102
Q

If a Colorado homeowner has not paid their taxes for the pervious year by what date must they make a payment in order to avoid penalties

A

April 30

103
Q

What does DRE stand for

A

Division of Real Estate

104
Q

Colorado Broker Licensing Act includes 3 important disclosures

A
  • Tangible Net Benefit Disclosure
  • Lock-in-agreement
  • Compensation Disclosure
105
Q

What is the main purpose of DORA

A

Impose regulations on occupation and professions only when it is necessary to protect health safety or welfare also called (sunrise review)

106
Q

Does DORA require those who directly supervise individuals who negotiate or originate loans to have license

A

Yes

107
Q

If a mortgage broker loses their license how long do they have to wait to obtain a new license

A

2 years

108
Q

When is a Tangible Net Benefit Disclosure due

A

Same time as application for non traditional loans (refi,interest only , ARM )

109
Q

What is Risk Layering

A

Risk Layering is offering a Nontraditional Mortgage to a borrower with Poor Credit and using Reduced Documentations

110
Q

Colorado Broker Licensing Act includes 3 important disclosures

A
  • Tangible Net Benefit Disclosure
  • Lock-in-agreement
  • Compensation Disclosure
111
Q

Lock-in-agreement can be locked for __ to __ Days

A

7 to 120 (but most are 30 to 60 days)

112
Q

GAO stand for

A

Government Accountability Office

Conducted study on how much consumer know about non traditional mortgage products

113
Q

What agency is responsible for ensuring compliance with the Colorado Mortgage BrokerRegistration Act

A

DORA

114
Q

What document in a mortgage loan transaction pledges a property to lender as a security for a payment of debt

A

Mortgage

115
Q

What is the most important consideration for originator when hiring an appraiser

A

Wether the appraiser is endorsed by a lender

116
Q

In addition to protection provided to borrowers of covered loans the colorado Consumer Equity Protection Act creates a list of prohibitions that apply to the ordination of all loans in the state

A

Originator may not facilitate an unconscionable loan agreement

Deceptive advertising

Misrepresentation and use of false information on a loan application

117
Q

What is included in a Loan File

A

Formal written loan application
Copy of the notice of the right to receive an appraisal
GFE

118
Q

What is the legal document that obligates a borrower to repay a mortgage loan and specifies the terms by which the repayment will occur

A

Promissory note

119
Q

What would a processor need from an applicant to conduct a verification of deposit

A

A signed authorization to gather information

120
Q

What is the underwriters principle responsibly

A

To act on behalf of the lender to determined if the borrowers meets the lenders guidelines

121
Q

The Fair Housing Act is regulated by which of the following authorities

A

HUD

122
Q

What items can cloud a title

A

Easement
Land-lock
Leasehold

123
Q

When is an escrow account typically established

A

At settlement

124
Q

What affiliated business violation was uncovered by a colorado official leading to resolve by HUD to put an end to the practice

A

Sham title reinsurance arrangement

125
Q

What must happen before a title binder can be issued to a lender

A

All liens judgments and ownership must be determined

126
Q

What agency is responsible for managing flood disaster requirements

A

FEMA

Federal emergency management flood agency

127
Q

What does a title company use to determine the amount of funds to disburse to the old lender in a refinance transaction

A

Payoff statement from the lien holder

128
Q

What could result in a three year right to rescission

A

Failure to disclose all of the terms of the lending transaction as required by TILA

129
Q

What guarantees a lender priority of lien

A

Subordination agreement

130
Q

What is the best description of a mortgage back security

A

Bonds which are financed by residential mortgage payments

131
Q

What in the general course of business negotiates loans for borrowers while a separate entity provides the funds for the loans

A

Mortgage broker

132
Q

Can a Mortgage Broker Compensation Disclosure increase in fees after the disclosure was issued

A

only in certain circumstances
*additional charge was not reasonably foreseen
(must be done 3 days prior to close with an explanation)

133
Q

Tenancy in common means

A

Shared ownership with each buyer owing a separate but equal share of the property
Do not inherit

134
Q

Joint tenancy means

A

Married couples when one member of joint tenancy dies

The other inherits

135
Q

What type of loan does not require insurance

A

Subprime and VA

136
Q

Interest on a HECM loans are tax deductible

A

False

137
Q

In subprime refinance borrowers are generally taking cash against equity versus taking advantage of lower interest rates.
True or false

A

True

138
Q

The interest rate tigger for first lien mortgage under HOPEA

A

8% points above the rate for treasury securities with a comparable rate

139
Q

Title insurances is the preferred method of showing evidence of title
True or false

A

True

140
Q

Abstract and opinion is

A

Summary of every record filed that affects the title of the property

141
Q

Buyer disclosure is

A

If a buyer needs to sell their own property before they can complete the transaction

142
Q

CIC

Common Interest Community Documents

A

If the property is subject to a homeowners association or other kind of common interest community

143
Q

When do loan officer have to pay a third party

A

No later than 30 days after the recording of the loan closed or
90 days after third party completion of task which ever comes first

colorado practice test (1 decks)

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