Deck 2 Flashcards
The ___________________ is meant to facilitate the cancellation of private mortgage insurance. “Lender paid” mortgage insurance (which normally is in the form of a higher note rate) is not covered by the ________.
Homeowner’s Protection Act
HPA
A felony conviction within the __________ years immediately preceding ______________ is grounds for denial of an initial application.
seven
application
The housing expense ratio (front-end DTI) is calculated by dividing the sum total of all of the monthly equivalencies of all mandatory costs associated with __________________ by the borrowers’ gross monthly income.
owning the property
The Federal Housing Finance Agency (FHFA) was installed after a legislative merger between _________ and the _________ as the “conservator” of Fannie and Freddie. This means the FHFA is responsible for the daily operations of both GSEs.
HUD
OFHEO
The lender is only held to the ______% tolerance in fees regarding settlement service providers if the borrower chooses one identified by the lender. If the borrower decides to use his or her own choice, the lender is not held to the ______% standard.
10%
10%
______________sometimes engage in table-funding which allows them to, in theory, be a lender on a loan and close in their own name. Once the loan closes, it is immediately sold and assigned to another entity.
Mortgage brokers
__________ requires action from a creditor if a self-test shows “it is more likely than not” that a violation has occurred. Taking corrective action is not an admission of guilt.
ECOA
The FHA afforded mortgage lending a jumpstart during the Great Depression by ___________ the full value of mortgages for qualified borrowers. By ________ these loans, the FHA eliminated the risk of foreclosure to lenders, thereby encouraging lenders to make new loans.
insuring
insuring
A “___________________” refers to anyone with an ownership interest on the property being financed. All parties to a rescindable transaction must receive _______ copies of the right to rescind at settlement. Any one of them may exercise this right.
party to the transaction
two
In having oversight and supervisory authority over loan originators, a state licensing agency must participate in the __________, conduct _____________, and write _____________________.
NMLS
background checks
rules and regulations
The FHFA is now the government entity responsible for overseeing the daily operations of both ____________ and ____________. Additionally, the FHFA sets the current conforming loan limits annually and determines areas across the country that are designated as “high-cost areas.”
Fannie Mae
Freddie Mac
Caps on ARMs limit the amount an interest rate or payment can ___________ during any one adjustment ________ or even over the _______ of the loan.
adjust
period
lifetime
___________ prohibits discrimination based on race, color, religion, national origin, sex, marital status, age, the fact that the applicant receives public assistance income, or because an applicant exercised his or her rights under the Consumer Credit Protection Act.
ECOA
Current FHA guidelines mandate _____________ MIP when the borrower’s initial down payment is 10% or less.
life-of-loan
Section 32 of Regulation Z (TILA) deals with added provisions and protections that are required if a loan trips one or both of the thresholds: either a “points and fees” threshold or an “APR” threshold. Loans tripping either (or both) of these thresholds are subject to the provisions required by the _________________ which is Section 32 of TILA).
Home Owner’s Equity Protection Act (HOEPA)
Borrowers earning certain non-taxed income are permitted to “gross-up” earnings by _______% since W-2 income is allowed to be considered at the gross (pre-taxed) amount paid.
25%
The _______________________ (or NMLSR) is the centralized system meant to streamline the licensing process and help prevent mortgage fraud by publicizing the acts of unscrupulous professionals.
The Nationwide Mortgage Licensing System & Registry
The _________________ bursting had nothing to do with unethical practices. It had everything to do with the standard economic principals of supply and demand. As demand diminished supply increased or stabilized driving home prices down.
housing bubble
The Fair and Accurate Credit Transactions Act of ______ (FACTA) amended the FCRA. Therefore, its regulatory oversight is the same as the FCRA, which means that the FTC is responsible for its oversight and enforcement.
2003
A borrower is required to bring a minimum down payment of 3.5% to an FHA closing. If his or her credit score is below 580, however, the minimum down payment increases to ______%.
10%
The form lenders use to report _________ data is called the Loan Application Register (LAR).
HMDA
The abbreviation FHA stands for the ___________________. It was created in 1934 with the implementation of the ________________.
Federal Housing Administration
Federal Housing Act.
The four components to ARMs are _________ of change, _______, __________, and ____________.
frequency
index
margin
CAPs
ECOA requires action from a creditor if a self-test shows “___________________” that a violation has occurred. Taking corrective action is not an admission of guilt.
it is more likely than not
While some state regulators will allow for a “late renewal,” after _________________ the license is expired. Therefore, the originator is technically unlicensed and may not continue to engage in any activities that require a license to conduct business.
December 31st
A _____________ mortgage product is any mortgage product other than a 30-year fixed-rate mortgage.
nontraditional
_______________ fraud is investigated by the FBI (not the FTC), HUD, and the IRS.
Mortgage
Nontraditional credit includes payments for things not traditionally tracked by or reported to the _________________. This includes things like rent and utility bills. Any time nontraditional credit is considered, at least _______ tradeline must be for housing expense and no less than __________ nontraditional tradelines must be demonstrated.
credit bureaus
one
four
__________________ credit includes payments for things not traditionally tracked by or reported to the credit bureaus. This includes things like rent and utility bills. Any time nontraditional credit is considered, at least one tradeline must be for housing expense and no less than four ___________ tradelines must be demonstrated.
Nontraditional
nontraditional
The abbreviation FHA stands for the Federal Housing Administration. It was created in __________ with the implementation of the Federal Housing Act.
1934
The form lenders use to report HMDA data is called the ______________________.
Loan Application Register (LAR)
RESPA prohibits any unearned fees or unreasonable charges even if there were _________ performed.
services
Mortgage fraud is investigated by the ________ , _______, and the _______.
FBI
HUD
IRS
All criminal history information must be provided by the state’s ________________ to the state officials responsible for regulating state-licensed loan originators to the extent criminal history background checks are required under the loan originator licensing laws of the state. The FBI is not a state agency.
Attorney General
A __________________ allows the borrower to choose when he or she wants to lock the loan. This type of agreement can allow interest rates and points to rise and fall with the market, or it can lock the rate but let the points paid for that rate rise and fall based on market conditions.
float agreement
RESPA requires the disclosure of the _____, the ____________, and the ______________ within three days of a purchase loan application
- LE
- HUD Home Loan Toolkit
- Mortgage Servicing Disclosure Statement
Borrowers successfully pursuing a HECM (one of the ________ types of reverse mortgage loan options) must be ______ years of age or older on or by the loan’s settlement date.
three
62
Warehouse lenders often use ___________________ in the agreements with brokers to assure themselves some protection against fraudulent activity during the loan process. If fraud or faulty underwriting is uncovered, the originating lender could be required to buy the loan back from the investors.
buyback provisions
While some state regulators will allow for a “late renewal,” after December 31st the license is expired. Therefore, the originator is technically ___________ and may not continue to engage in ___________________ to conduct business.
unlicensed
any activities that require a license
A nontraditional mortgage product is any mortgage product other than a ______________________.
30-year fixed-rate mortgage
___________________ often involves some conspiracy among several industry insiders. Together they often scheme to defraud lenders therefore leading to much greater losses than fraud for __________. _________________ occurs commonly when a borrower misrepresents his or her qualifications to improve their chances of loan approval.
Fraud for profit
housing
Fraud for housing
The closer is responsible for reviewing the terms of the loan with the borrower but not to _______________________. Full disclosure and discussion of all fees and the obligations of the borrower should have already taken place with the loan originator prior to closing.
explain any loan terms in too great a detail
A business must update its ___________ data every 31 days to remain compliant since people can be added to the list at any time.
do-not-call
The margin is a fixed number set by the lender and is not subject to change. It represents the____________and ____________ operating costs and profit margin and varies from lender to lender.
lender’s
investor’s
The E-Sign Act allows the use of electronic records if the consumer has _____________________ to such use and has not __________ such consent.
- affirmatively consented
- withdrawn
The FHFA is now the government entity responsible for overseeing the daily operations of both Fannie Mae and Freddie Mac. Additionally, the FHFA sets the current conforming loan limits annually and determines areas across the country that are designated as “____________.”
high-cost areas
A business must update its do-not-call data every _______ days to remain compliant since people can be added to the list at any time.
31
The _______________ ratio (front-end DTI) is calculated by dividing the sum total of all of the monthly equivalencies of all mandatory costs associated with owning the property by the borrowers’ gross monthly income.
housing expense
Title theory states operate by the ________________ retaining title through the ______________ through which the lender allows the borrower to reside in the property while the debt is in force and being paid as agreed. Since the lender is technically the ____________, if the borrower defaults on the loan, a non-judicial foreclosure is all that is required to “evict” the borrower from the property.
lender
Deed-of-Trust
deed holder
___________ created and installed the FHFA (Federal Housing Finance Agency) as the new “conservator” of the troubled GSEs (Fannie Mae and Freddie Mac). The FHFA’s powers include the responsibility to set the conforming loan limits from year to year.
HERA
__________ prohibits any unearned fees or ______________ charges even if there were services performed.
- RESPA
- unreasonable
State regulators, such as a __________________, are not responsible for determining criminal sentences for violators of the SAFE Act. This is a matter reserved for the _____________.
Commissioner
courts
The Nationwide Mortgage Licensing System & Registry (or NMLSR) is the centralized system meant to streamline the licensing process and help prevent ________________ by ___________ the acts of unscrupulous professionals.
- mortgage fraud
- publicizing
The HPA requires mortgage servicers to automatically remove PMI on any loan designated as “high-risk” once the loan’s LTV reaches ______% and assuming that the loan is __________
77
current
An ________ borrower is required to pay annual MIP through monthly payments for a minimum of eleven years or the life-of-loan based on the loan’s original LTV.
FHA
__________ provisions in Section 10 require an escrow refund if an escrow analysis uncovers an overage of $50 or more. When applicable, the overage is required to be refunded within _________ days from the date of analysis. Although a mortgage servicer may refund an overage of less than $50 if it chooses to, it may also elect to retain it in escrow to be absorbed by future shortages or added to future overages.
RESPA
30
A ______________ loan is a conventional loan that “___________” to FNMA’s and/or Freddie Mac’s underwriting parameters as well as to FHFA-established annual loan limits.
conforming
conforms
“The Guidance” as it is generally referred to, addresses concerns that borrowers typically don’t understand about the features and risks of many ___________ products or that payment-option products often result in ____________. Other nontraditional ARMs and fixed-rate loans have also come under scrutiny because of the use of reduced-documentation programs.
interest-only
negative amortization
RESPA requires compensation for settlement services to be earned. Any compensation not in directly related to _____________ is a violation. This is an example of a markup.
an actual service
If a consumer orally asks about the cost of credit, the lender must state the ____________________ of the product.
annual percentage rate
“_______________” is a term that refers to the diligent matching of loan programs with the current financial circumstances of each customer.
Loan suitability
“Loan suitability” is a term that refers to the diligent matching of _________________ with the current financial circumstances of each customer.
loan programs
Encumbrance is a term that totals all claims (mortgages or liens) against a property that may affect the _________________ of the property.
ability to transfer ownership
RESPA provisions in Section 10 require an escrow refund if an escrow analysis uncovers an overage of $50 or more. When applicable, the overage is required to be refunded within 30 days from the date of analysis. Although a mortgage servicer may refund an overage of less than $50 if it chooses to, it may also elect to retain it in escrow to be absorbed by future ___________ or added to future __________.
shortages
overages
The Do-Not-Call Implementation Act gives authority to the __________ to cover calls made to and from points within the same state. The _________ oversees calls made from state to state.
FCC
FTC
A borrower is required to bring a minimum down payment of ________% to an FHA closing. If his or her credit score is below _______, however, the minimum down payment increases to 10%.
3.5%
580
_________________ refers to the unethical practice of avoiding the pursuit or acceptance of business from customers located in a specific geographic area deemed to be economically disadvantaged.
Redlining
Redlining refers to the unethical practice of avoiding the pursuit or acceptance of business from customers located in a _______________ area deemed to be economically ________________.
specific geographic
disadvantaged
Current _______ guidelines mandate life-of-loan MIP when the borrower’s initial down payment is 10% or less.
FHA
The _______________________ advises parties to a loan transaction of the seriousness of fraud. Further, it explains that knowingly providing false or misleading information is a federal crime and can lead to fines of up to $1,000,000 and/or imprisonment of up to 30 years.
FBI Mortgage Fraud Warning
The__________________ was installed after a legislative merger between HUD and the OFHEO as the “conservator” of Fannie and Freddie. This means the ____________ is responsible for the daily operations of both GSEs.
Federal Housing Finance Agency (FHFA)
FHFA
A mortgage application is a legal document. Consequently, anyone signing one must be of ________ age.
legal
Borrowers earning certain non-taxed income are permitted to “___________” earnings by 25% since W-2 income is allowed to be considered at the gross (pre-taxed) amount paid.
gross-up
__________ ARMs typically contain a conversion option through which, between the loan’s second and fifth year, the borrower can convert the existing ARM to a fixed-rate loan, at market pricing plus a small margin, for a small fee and without having to refinance.
Standard
The Homeowner’s Protection Act is meant to facilitate the cancellation of private mortgage insurance. “_____________” mortgage insurance (which normally is in the form of a higher note rate) is not covered by the HPA.
Lender paid
The Federal Housing Finance Agency (FHFA) was installed after a legislative merger between HUD and the OFHEO as the “conservator” of ________ and _________. This means the FHFA is responsible for the daily operations of both GSEs.
Fannie
Freddie
Some balloon loans contain a conditional right to modify by which the borrower may request a modification no later than _____ days prior to the loan’s call date. As long as the loan is current and without any ___-day late payments within the most recent twelve months, as long as the borrower is living in the home, there are no other liens associated with the property, and the new rate is no higher than ____% above the current rate, the lender will allow borrowers whose balloon loans contain a conditional right to modify to, for a fee, remain in the loan for the remainder of the loan’s 30-year term without having to refinance or make a balloon payment.
45
30
5
The Gramm-Leach-Bliley Act is the federal law that limits or restricts the use of a consumer’s non-public personal information. It requires the issuance of a privacy statement and opt out guidelines at ____________________.
an account’s closing
The lender is only held to the 10% tolerance in fees regarding _______________ providers if the borrower chooses one identified by the lender. If the borrower decides to use his or her own choice, the lender is not held to the 10% standard.
settlement service
“The _____________” as it is generally referred to, addresses concerns that borrowers typically don’t understand about the features and risks of many interest-only products or that payment-option products often result in negative amortization. Other nontraditional ARMs and fixed-rate loans have also come under scrutiny because of the use of reduced-documentation programs.
Guidance
ECOA requires that the borrower knows the status of the loan within 30 days of application. This includes letting the borrower know, within 30 days, that the application needs to be __________ in order to further consider his or her file.
completed
An ARM, whether fixed from the start or fully-adjustable from the start, carries with it a specific “________________” also sometimes referred to as an “Adjustment Interval.” Both of these define the amount of time either before an ARM begins to adjust or between adjustments.
Adjustment Frequency
Real estate broker fees are not a cost of the financing paid for by the _________ or ________. Consequently, they are not disclosed on the LE.
borrower
seller
The HPA mandates that, if a fixed-rate loan being originated contains _______, the lender must provide the customer with an amortization schedule at closing.
PMI
A loan modification is not technically a loan program. It is an alternative to ____________ by permanently changing some aspect of an existing loan agreement because of a borrower’s inability to meet the terms of the original agreement.
foreclosure
A balloon mortgage requires the borrower to make one large payment at __________________. This payment may also be referred to as a “call,” a “demand,” or a “bullet.” It often has a 30-year amortization but is typically due and payable in full in 5, 7, 10, or 15 years.
the end of a loan term
A ________________ is not technically a loan program. It is an alternative to foreclosure by permanently changing some aspect of an existing loan agreement because of a borrower’s inability to meet the terms of the original agreement.
loan modification
Mishandling a borrower’s funds often leads to commingling or ______________ and is prohibited by RESPA.
misappropriation
Mishandling a borrower’s funds often leads to ______________ or misappropriation and is prohibited by RESPA.
commingling
Conventional loan borrowers with an LTV higher than 80% are required by conforming lenders to obtain private mortgage insurance. In a ___________ scenario, however, a borrower takes out a simultaneous second mortgage in order to avoid paying PMI.
piggyback
Section ______ of Regulation Z (TILA) deals with added provisions and protections that are required if a loan trips one or both of the thresholds: either a “points and fees” threshold or an “APR” threshold. Loans tripping either (or both) of these thresholds are subject to the provisions required by the Home Owner’s Equity Protection Act (HOEPA, which is Section _______ of TILA).
32
32
The sales comparison approach to appraisals is most commonly used for _________________ properties within an area that has recent sales data to analyze for comparison
residential
The ________________ Act gives authority to the FCC to cover calls made to and from points within the same state. The FTC oversees calls made from state to state.
Do-Not-Call Implementation
RESPA provisions in Section _____ require an escrow refund if an escrow analysis uncovers an overage of $_____or more. When applicable, the overage is required to be refunded within 30 days from the date of analysis. Although a mortgage servicer may refund an overage of less than $______ if it chooses to, it may also elect to retain it in escrow to be absorbed by future shortages or added to future overages.
10
$50
$50
RESPA Section _____ prohibits providing anything of value in exchange for a referral.
8
A loan modification is not technically a loan program. It is an alternative to foreclosure by _____________ changing some aspect of an existing loan agreement because of a borrower’s ____________ to meet the terms of the original agreement.
permanently
inability
The Fair and Accurate Credit Transactions Act of 2003 (FACTA) amended the FCRA. Therefore, its regulatory oversight is the same as the FCRA, which means that the __________ is responsible for its oversight and enforcement.
FTC
Lien-theory states utilize the ____________ as a security instrument while title-theory states utilize the ______________.
Mortgage
Deed-of-Trust
Overtime income is considered only if it has been consistently earned for at least _______ years, and the employer verifies it is ____________. Otherwise it is considered an anomaly.
two
likely to continue
Fraud for profit often involves some conspiracy among several ___________ insiders. Together they often scheme to defraud lenders therefore leading to much greater losses than fraud for housing. Fraud for housing occurs commonly when a borrower misrepresents his or her ____________ to improve their chances of loan approval.
industry
qualifications
A “party to the transaction” refers to anyone with an _________________ on the property being financed. ___________ to a rescindable transaction must receive two copies of the right to rescind at settlement. ____________ of them may exercise this right.
ownership interest
All parties
Any one
The Federal Housing Finance Agency (FHFA) was installed after a legislative merger between HUD and the OFHEO as the “_________” of Fannie and Freddie. This means the FHFA is responsible for the daily operations of both GSEs.
conservator
Conforming loan programs meeting the guidelines set forth by Fannie Mae and Freddie Mac. The general income substantiation guidelines set for salaried income include the most recent _____ years’ W-2s and paystubs from the most recent ________ days.
two
30
The sum of the surety bond must be maintained in an amount that reflects the __________________.
dollar value of loans originated
A state-licensed loan originator who fails to maintain a valid license for a period of five years or longer must retake the licensing test. However, any time during that five-year period in which the individual was acting as a __________________ is not included when determining whether or not the licensing test must be retaken.
registered loan originator
Mortgage brokers sometimes engage in table-funding which allows them to, in theory, be a lender on a loan and close in their own name. Once the loan closes, it is immediately sold and ____________ to another entity.
assigned
The ________________ approach to appraisals is most commonly used for residential properties within an area that has recent sales data to analyze for comparison.
sales comparison
The HPA requires mortgage servicers to automatically remove PMI on any loan designated as “___________” once the loan’s LTV reaches 77% and assuming that the loan is current
high-risk
Encumbrance is a term that totals all claims (_________________) against a property that may affect the ability to transfer ownership of the property.
mortgages or liens
Borrowers successfully pursuing a __________ (one of the three types of reverse mortgage loan options) must be 62 years of age or older on or by the loan’s settlement date.
HECM
_______________ requires compensation for settlement services to be earned. Any compensation not in directly related to an actual service is a violation. This is an example of a markup.
RESPA
_____________ requires that the maximum amount of deposits collected in escrow cannot exceed 1/6 of the estimated total annual disbursements. This means the servicer is prevented from overcharging the borrower by any more than two months total (which is simply used as a cushion for fluctuations).
RESPA
Warehouse lenders often use buyback provisions in the agreements with brokers to assure themselves some protection against __________ activity during the loan process. If fraud or faulty _____________ is uncovered, the originating lender could be required to buy the loan back from the __________.
fraudulent
underwriting
investors
There are three types of reverse mortgage loans. They include __________ reverse mortgages, _____________, and ___________ mortgages.
single purpose
home equity conversion mortgages (HECMs)
proprietary
HERA created and installed the FHFA (Federal Housing Finance Agency) as the new “conservator” of the troubled ________ (Fannie Mae and Freddie Mac). The FHFA’s powers include the responsibility to set the ____________________ from year to year.
- GSEs
- conforming loan limits
Some ________ loans contain a conditional right to modify by which the borrower may request a modification no later than 45 days prior to the loan’s call date. As long as the loan is current and without any 30-day late payments within the most recent twelve months, as long as the borrower is living in the home, there are no other liens associated with the property, and the new rate is no higher than 5% above the current rate, the lender will allow borrowers whose _________ loans contain a conditional right to modify to, for a fee, remain in the loan for the remainder of the loan’s 30-year term without having to refinance or make a balloon payment.
balloon
balloon
Section 32 of Regulation Z (TILA) deals with added provisions and protections that are required if a loan trips one or both of the thresholds: either a “_______________” threshold or an “_________” threshold. Loans tripping either (or both) of these thresholds are subject to the provisions required by the Home Owner’s Equity Protection Act (HOEPA, which is Section 32 of TILA).
points and fees
APR
RESPA requires that an _______________________ be used to describe any relationships between service providers that are affiliated in some way. Among other things, the __________ must state that the borrower cannot be required to use this third-party servicer (unless that party is an attorney, tax search agent, flood cert agent, appraiser, or credit reporting agency).
- Affiliated Business Arrangement Disclosure
- ABAD
The GLB Act covers “_____-_______ personal information.”
non-public
RESPA requires the disclosure of the LE, the HUD Home Loan Toolkit, and the Mortgage Servicing Disclosure Statement within _____ days of a ___________________________
- three
- purchase loan application
Mortgage brokers sometimes engage in _______________ which allows them to, in theory, be a lender on a loan and close in their own name. Once the loan closes, it is immediately sold and assigned to another entity.
table-funding
A state-licensed loan originator who fails to maintain a valid license for a period of __________ years or longer must retake the licensing test. However, any time during that ___________-year period in which the individual was acting as a registered loan originator is not included when determining whether or not the licensing test must be retaken.
five
five
_____________ regulators, such as a Commissioner, are not responsible for determining criminal sentences for violators of the SAFE Act. This is a matter reserved for the courts.
State
A __________________ is not considered to be an immediate family member.
cousin
The Gramm-Leach-Bliley Act is the federal law that limits or restricts the use of a consumer’s non-public personal information. It requires the issuance of a _____________ and ___________ guidelines at an account’s closing.
- privacy statement
- opt out
The ___________ is a fixed number set by the lender and is not subject to change. It represents the lender’s and investor’s operating costs and profit margin and varies from lender to lender.
margin
RESPA prohibits any __________ fees or unreasonable charges even if there were services performed.
unearned
An ARM, whether fixed from the start or fully-adjustable from the start, carries with it a specific “Adjustment Frequency” also sometimes referred to as an “_________________.” Both of these define the amount of time either before an ARM begins to adjust or between adjustments.
Adjustment Interval
Judgments related to medical expenses are not considered in assessing an applicant’s level of ______________ responsibility.
financial
The _________ afforded mortgage lending a jumpstart during the Great Depression by insuring the full value of mortgages for qualified borrowers. By insuring these loans, the _________ eliminated the risk of foreclosure to lenders, thereby encouraging lenders to make new loans.
FHA
FHA
The Fair and Accurate Credit Transactions Act of 2003 (FACTA) amended the __________. Therefore, its regulatory oversight is the same as the FCRA, which means that the FTC is responsible for its oversight and enforcement.
FCRA
While some state regulators will allow for a “_______________,” after December 31st the license is expired. Therefore, the originator is technically unlicensed and may not continue to engage in any activities that require a license to conduct business.
late renewal
_____________ theory states operate by the lender retaining title through the Deed-of-Trust through which the lender allows the borrower to reside in the property while the debt is in force and being paid as agreed. Since the lender is technically the deed holder, if the borrower defaults on the loan, a non-judicial foreclosure is all that is required to “evict” the borrower from the property.
Title
Referrals are often abused or mishandled. RESPA prohibits the paying or accepting of a referral fee and states that the only acceptable thing to receive in exchange for a referral is a ____________ or a ___________ referral.
thank-you
reciprocal
_____________ property and _____________ refinances do not contain any rescission period. The loan would fund immediately after settlement.
Investment
second-home
__________ requires that the borrower knows the status of the loan within 30 days of application. This includes letting the borrower know, within 30 days, that the application needs to be completed in order to further consider his or her file.
ECOA
______________ states utilize the Mortgage as a security instrument while ____________ states utilize the Deed-of-Trust.
Lien-theory
title-theory
Reverse mortgage ____________ is charged on the outstanding balance and _________ to the debt, which means the debt increases with each payment or draw. This is how a reverse mortgage is designed to be implemented.
interest
added
The ________ requires mortgage servicers to automatically remove PMI on any loan designated as “high-risk” once the loan’s LTV reaches 77% and assuming that the loan is current
HPA
The NMLS loan originator license is valid for ______________ in total and must be renewed ________________.
12 months (one year)
annually
It is illegal for any actual or potential referral source to offer or accept anything of value. RESPA Section 8 provides for punishment of up to _____ year in a federal prison along with a fine of up to $______________.
one
10,000 per occurrence
__________________ and ________________ loans are two options used to finance the construction of a home being built. Both have advantages and disadvantages based on the borrower’s needs and the construction’s timeline.
Construction-to-permanent
construction
Title theory states operate by the lender retaining title through the Deed-of-Trust through which the lender allows the borrower to reside in the property while the debt is in force and being paid as agreed. Since the lender is technically the deed holder, if the borrower defaults on the loan, a non-judicial foreclosure is all that is required to “___________” the borrower from the property.
evict
___________ requires that an Affiliated Business Arrangement Disclosure be used to describe any relationships between service providers that are affiliated in some way. Among other things, the ABAD must state that the borrower cannot be required to use this third-party servicer (unless that party is an attorney, tax search agent, flood cert agent, appraiser, or credit reporting agency).
RESPA
The FBI Mortgage Fraud Warning advises parties to a loan transaction of the seriousness of fraud. Further, it explains that knowingly providing ________ or ______________ information is a federal crime and can lead to fines of up to $1,000,000 and/or imprisonment of up to 30 years.
false
misleading
The housing expense ratio (____________ DTI) is calculated by dividing the sum total of all of the monthly equivalencies of all mandatory costs associated with owning the property by the borrowers’ gross monthly income.
front-end
A balloon mortgage requires the borrower to make one large payment at the end of a loan term. This payment may also be referred to as a “______,” a “_______,” or a “_________.” It often has a ________-year amortization but is typically due and payable in full in 5, 7, 10, or 15 years.
call
demand
bullet
30
Neither the _____________ nor the ______________ actually contain the borrower’s contractual promise to repay the loan. The note, or promissory note, is the borrower’s promise to repay the loan.
mortgage
deed of trust
An FHA borrower is required to pay annual _______ through monthly payments for a minimum of eleven years or the life-of-loan based on the loan’s original LTV.
MIP
State regulators, such as a Commissioner, are not responsible for determining ________________ for violators of the SAFE Act. This is a matter reserved for the courts.
criminal sentences
“_____ Doc” and “______ Doc” loans have all but disappeared in the market. In the nontraditional mortgage boom, the SISA, SIVA, and NINA were commonly used to help borrowers qualify for loans in circumstances when they couldn’t quite otherwise.
No
Low
The ___________ is now the government entity responsible for overseeing the daily operations of both Fannie Mae and Freddie Mac. Additionally, the ____________ sets the current conforming loan limits annually and determines areas across the country that are designated as “high-cost areas.”
FHFA
FHFA
FHA debt-to-income guidelines are _____/_______.
31/43
The FBI Mortgage Fraud Warning advises parties to a loan transaction of the seriousness of fraud. Further, it explains that knowingly providing false or misleading information is a federal crime and can lead to fines of up to $________________ and/or imprisonment of up to _______ years.
$1,000,000
30
Mishandling a borrower’s funds often leads to commingling or misappropriation and is prohibited by ___________.
RESPA
Current FHA guidelines mandate life-of-loan MIP when the borrower’s initial down payment is ______% or less.
10%
An FHA borrower is required to pay annual MIP through monthly payments for a minimum of ______________ or the _____________ based on the loan’s original LTV.
eleven years
life-of-loan
A _________ mortgage payment plan is a prepayment strategy used to essentially make one “extra” payment per year, by applying one-half of a monthly payment every __________ thus making it possible to pay off a typical 30-year loan in as few as 23 – 24 1/2 years.
bi-weekly
two weeks
Judgments related to _____________ expenses are not considered in assessing an applicant’s level of financial responsibility.
medical
As long as all applicants are charged the application fee regardless of whether or not they close on a loan, a lender does not have to include its application fee in the _____________.
APR
Standard ARMs typically contain a ___________________ through which, between the loan’s second and fifth year, the borrower can convert the existing ARM to a fixed-rate loan, at market pricing plus a small margin, for a small fee and without having to refinance.
conversion option
Some balloon loans contain a conditional right to modify by which the borrower may request a modification no later than 45 days prior to the loan’s call date. As long as the loan is current and without any 30-day late payments within _____________, as long as the borrower is _________, there are no _________ with the property, and the new rate is no higher than 5% above the current rate, the lender will allow borrowers whose balloon loans contain a conditional right to modify to, for a fee, remain in the loan for the remainder of the loan’s 30-year term without having to refinance or make a balloon payment.
the most recent twelve months
living in the home
other liens associated
ECOA requires that the borrower knows the status of the loan within ______ days of application. This includes letting the borrower know, within _______ days, that the application needs to be completed in order to further consider his or her file.
- 30
- 30
A _______________ mortgage requires the borrower to make one large payment at the end of a loan term. This payment may also be referred to as a “call,” a “demand,” or a “bullet.” It often has a 30-year amortization but is typically due and payable in full in 5, 7, 10, or 15 years.
balloon
Title theory states operate by the lender retaining title through the Deed-of-Trust through which the lender allows the borrower to reside in the property while the debt is in force and being paid as agreed. Since the lender is technically the deed holder, if the borrower defaults on the loan, a _________________ foreclosure is all that is required to “evict” the borrower from the property.
non-judicial
HERA created and installed the ____________ as the new “____________” of the troubled GSEs (Fannie Mae and Freddie Mac). The FHFA’s powers include the responsibility to set the conforming loan limits from year to year.
FHFA (Federal Housing Finance Agency)
conservator
The ___________ was enacted to protect the consumer in any transaction involving the use of credit reports. It is meant to govern the accuracy, fairness, and privacy of a consumer’s information when it is assembled for the purposes of credit evaluation.
FCRA
The Homeowner’s Protection Act is meant to facilitate the _________________. “Lender paid” mortgage __________ (which normally is in the form of a higher note rate) is not covered by the HPA.
cancellation of private mortgage insurance
insurance
The right of rescission utilizes the definition of “____________ business day.”
precise
The only three instances when a loan originator would be permitted to refuse completing a mortgage application would be when the applicant is committing ________, when the applicant is under the age of ________ and prohibited from legally signing a legal document such as the URLA, or when the applicant is ______________ rendering him or her unable to enter into a legally-binding contract.
- fraud
- 18
- mentally incompetent
The HPA mandates that, if a fixed-rate loan being originated contains PMI, the lender must provide the customer with an ____________________ at closing.
amortization schedule
The margin is a fixed number set by the ___________ and is not subject to change. It represents the lender’s and investor’s ______________ and ____________ and varies from lender to lender.
lender
operating costs
profit margin
RESPA requires that the maximum amount of deposits collected in escrow cannot exceed ________ of the estimated total annual disbursements. This means the servicer is prevented from overcharging the borrower by any more than __________ total (which is simply used as a cushion for fluctuations).
- 1/6
- two months
The __________ applies to residential mortgages used for primary residences and applicable to lenders, loan servicers, and PMI insurers.
HPA
A conforming loan is a conventional loan that “conforms” to FNMA’s and/or Freddie Mac’s ________________ as well as to FHFA-established _____________.
underwriting parameters
annual loan limits
The lender is only held to the 10% tolerance in fees regarding settlement service providers if the ____________ chooses one identified by the lender. If the __________ decides to use his or her own choice, the lender is not held to the 10% standard.
- borrower
- borrower
Neither the mortgage nor the deed of trust actually contain the borrower’s contractual promise to repay the loan. The ___________, or ____________, is the borrower’s promise to repay the loan.
note
promissory note
The HPA applies to residential mortgages used for _____________ residences and applicable to lenders, loan servicers, and PMI insurers.
primary
_____________________ is the federal law that limits or restricts the use of a consumer’s non-public personal information. It requires the issuance of a privacy statement and opt out guidelines at an account’s closing.
Gramm-Leach-Bliley Act
The only fee allowed to be charged to a borrower prior to disclosure of the Loan Estimate is a __________ fee.
credit report
________________ is a term that totals all claims (mortgages or liens) against a property that may affect the ability to transfer ownership of the property.
Encumbrance
It is illegal for any actual or potential referral source to offer or accept anything of value. ____________ Section _____ provides for punishment of up to one year in a federal prison along with a fine of up to $10,000 per occurrence.
RESPA
8
No statement may be made to coerce a different value with an appriaser. Asking for ____________ or ________________, however, is acceptable.
clarification
justification
RESPA Section 8 prohibits providing anything of __________ in exchange for a referral.
value
A float agreement allows the borrower to choose when he or she wants to lock the loan. This type of agreement can allow______________ to rise and fall with the market, or it can lock the rate but let the __________ for that rate rise and fall based on market conditions.
interest rates and points
points paid
In having oversight and supervisory authority over loan originators, a _______________ must participate in the NMLS, conduct background checks, and write rules and regulations.
state licensing agency
The HPA applies to residential mortgages used for primary residences and applicable to _________, ____________, and _________ insurers.
lenders
loan servicers
PMI
ECOA prohibits discrimination based on race, color, religion, national origin, sex, marital status, age, the fact that the applicant receives public assistance income, or because an applicant exercised his or her rights under the __________ _________ ___________ Act.
Consumer Credit Protection
A bi-weekly mortgage payment plan is a prepayment strategy used to essentially make one “___________” payment per year, by applying one-half of a monthly payment every two weeks thus making it possible to pay off a typical 30-year loan in as few as 23 – 24 1/2 years.
extra
The only times one can refuse to complete or accept an application is when there is ______________, the applicant is ______________, or the applicant is below the age of _______.
suspicion of fraud
mentally incompetent
18
The _________ mandates that, if a fixed-rate loan being originated contains PMI, the lender must provide the customer with an amortization schedule at closing.
HPA
In a purchase transaction when the party selling the property provides all or part of the financing, the loan is referred to as a seller _________ or ____________ mortgage.
carry-back
take-back
“No Doc” and “Low Doc” loans have all but disappeared in the market. In the nontraditional mortgage boom, the _______, _______, and _______ were commonly used to help borrowers qualify for loans in circumstances when they couldn’t quite otherwise.
SISA
SIVA
NINA
The _________ is responsible for reviewing the terms of the loan with the borrower but not to explain any loan terms in too great a detail. Full disclosure and discussion of all fees and the obligations of the borrower should have already taken place with the loan originator prior to closing.
closer
A cousin is not considered to be an ______________ family member.
immediate
Investment property and second-home refinances do not contain any ________________. The loan would fund immediately ______________.
rescission period
after settlement
____________ requires the disclosure of the LE, the HUD Home Loan Toolkit, and the Mortgage Servicing Disclosure Statement within three days of a purchase loan application
RESPA
If reported revolving debt does not show a payment amount, an originator should ______________ amount through the creditor.
verify the minimum payment
