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
