Deck 3 Flashcards
_____________ involves the identification of multiple risk considerations throughout a particular mortgage. Solely stating one’s income to qualify for an ARM loan with an interest-only feature constitutes multiple risk factors ________ together.
Risk layering
layered
When an existing law is amended or when new legislation is passed, Regulation ___ addresses these circumstances by requiring that the Bureau be notified any time a state enacts legislation that affects its compliance with the SAFE Act. The CFPB may ask that the state submit evidence that its law is in compliance with the ________, for citations to relevant state laws and regulations, for information on the state regulator’s supervisory processes, and for data on the state regulator’s investigations, examinations, and enforcement actions.
H
SAFE Act
In the face of imminent foreclosure, a homeowner may simply elect to surrender his or her home by signing the deed over to the lender known as “______________” thereby avoiding a lengthy and costly foreclosure process.
deed-in-lieu of foreclosure
In accordance with (12 USC § 5107(d); 12 CFR §1008.115), the SAFE Act gives the Director of the CFPB authority to determine whether a state has adopted laws that satisfy the SAFE Act licensing requirements. Regulation _____ establishes a procedure for the CFPB to follow if it makes a determination of noncompliance.
H
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
No CRA may write a consumer report containing outdated financial information such as bankruptcies over ________ years old and other negative information such as consumer account delinquencies, paid tax liens, and satisfied civil judgments that are more than __________ years old unless the reporting relates to a credit transaction involving a principal amount of $150,000 or more.
ten
seven
The HPA exempts FHA or VA loans from consideration because FHA loans utilize MIP not PMI and the VA utilizes a funding fee and not PMI. Loans containing lender paid mortgage insurance involve the lender paying the PMI in exchange for the customer accepting a ______________
higher interest rate.
Under the __________, a mortgage servicer must refund any “unearned” PMI premium within 45 days of its receipt.
HPA
__________ concerns itself with the borrower’s current housing expense and their proposed housing expense. If an individual’s housing expense increases significantly beyond what they’re currently paying, they might ultimately experience difficulty making their payments.
Payment shock
No CRA may write a consumer report containing outdated financial information such as bankruptcies over ten years old and other negative information such as consumer account delinquencies, paid tax liens, and satisfied civil judgments that are more than seven years old unless the reporting relates to a credit transaction involving a principal amount of $__________ or more.
$150,000
If the business conducts business and is fully-operational on a Saturday, Saturday is considered a business day under the definition of “_______ business day.” The LE must be issued within three _______ business days of a mortgage application.
general
general
The Statement on Subprime Lending defines an individual as a credit risk if their credit history reflects two or more _______-day delinquencies within the prior 12-month period, one or more ______-day delinquencies within the prior 24 months, foreclosure, repossession, or charge-off within the prior 24 months, bankruptcy within the previous five years, having a credit score representing a high risk of default, or a debt-to-income ratio of ______% or higher.
30
60
50%
If the finance charge at closing is more than $100 _____ or _____ the finance charge appearing on the final CD, the lender must re-disclose the CD and wait an additional three days before closing.
above
below
The index is the investment portion of the ARM rate and the part that periodically ____________. The margin represents the _________, lender/investor operating costs and profit margin. Together they constitute the fully indexed accrual rate (FIAR).
fluctuates
fixed
If the settlement agent failed to issue the right of rescission documents in accordance with TILA, the rescission period is extended to ____________. TILA requires that all parties to the transaction receive ______ copies of the right of rescission at closing.
three years
two
Since the parties interacting through video conferencing can see and hear each other, the application is treated the same as a _________ application in terms of HMDA’s government monitoring disclosure requirements.
face-to-face
Making unlawful statements is a violation of ______ and includes making oral or written statements that __________ prospective credit applicants from applying for a loan.
ECOA
discourage
Regulation V, which encapsulates the FCRA, requires that ____________ protect the privacy of consumers in a credit transaction. That is why permission to access credit along with a permissible purpose is always required from anyone seeking to access someone’s credit data.
CRA’s
_______ is associated with FHA loans and is automatically removed after 11 years assuming that the borrower’s initial down payment was 10% or more.
MIP
Although a mortgage loan originator must ask an applicant about his or her marital status, he or she may only ask the applicant if he or she is married, separated, or unmarried. Delving deeper into an applicant’s marital status could constitute an ___________ violation.
ECOA
A student loan is an example of ________-ended credit.
closed
___________ requires that all mortgage loan applications be formally decisioned within 30 days from the date of application. If, by the 30th day, the lender lacks the documentation permitting it to render a formal decision, it must issue the applicant a __________________ itemizing all of the outstanding material and designating a specific timeframe by which the applicant must remit the material. If, after the designated timeframe elapses the lender is still without the required material, it will simply ___________ the applicant’s loan application.
ECOA
Notice of Incomplete Application
withdraw
When allocating principal pre-payments against a ______ rate loan, the periodic payment amount due on the loan never changes. Since the balance is lower than it otherwise would be after the application of a payment directly to principal and considering that the same periodic payment amount is continually remitted, the loan pays off sooner than it would otherwise thereby saving the borrower time on the loan and ________ spent while causing them to gain ________ more rapidly.
fixed
interest
equity
The ______ and _______ disclose the Annual Percentage Rate (APR) as being the cost of originating the loan expressed as an interest rate and the Finance Charge as being the cost of originating the loan expressed as a dollar amount.
LE
CD
____________ strictly prohibits fee splitting unless the parties splitting the fee have performed enough work to earn the fee. Income earned must be commensurate with the amount of work performed.
RESPA
When conducting a background check in response to an application for a mortgage license, personal references are not checked. Background checks involve __________ history, ______ history, previous and current _________, and a ________ review.
criminal history
civil history
employment
credit report
If an applicant exercises his or her right to rescind, all monies paid into the transaction must be refunded, even if they were spent on legitimate third-party settlement expenses such as an appraisal and/or a credit report. The lender must refund this money within ________ calendar days of the date of rescission.
20
Higher-priced mortgage loans (HMPLs) are described in TILA Section _____. A mortgage is a higher-priced mortgage loan when it is secured by a borrower’s ____________ and has an APR exceeding the average prime offer rate (APOR) by 1.5% for first lien loans as of the interest rate lock date and 3.5% for subordinate lien loans or where the APR exceeds the average prime offer rate (APOR) by 2.5% in the case of first lien jumbo loans.
35
principal dwelling
Anyone originating mortgages for a ______ institution regulated by a ___________ regulator or for an institution regulated by the ___________ is considered a registered loan originator and is not required to be licensed.
depository
federal banking
Farm Credit Administration
There is no ___________ of profitability afforded to non-profit entities.
acceptable percentage
In a face-to-face transaction when the applicant agrees to ____________, he or she is asked to sub-categorize himself or herself based on his or her designation. Specifically, if an applicant voluntarily defines himself or herself as Native Hawaiian or Other Pacifica Islander, he or she will be asked to sub-categorize that identification as Native Hawaiian, Guamanian or Chamorro, Samoan, or Other Pacific Islander.
self-identify
_____________ deems the mortgage professional responsible for looking out for the customer’s best interests. If a loan originator is able to charge a higher interest rate in order to receive a higher commission, he might not be incentivized to get the customer the best possible pricing.
Fiduciary responsibility
The Statement on Subprime Lending offered no cautionary advice regarding failing to offer multiple loan products. Instead, it focused on mortgage professional __________, the oversight of ____________, and fair _____________ by discouraging ____________. In fact, the Federal Reserve acted against product steering when it ratified a final rule prohibiting it on April 1, 2011.
training
third-party settlement providers
compensation
product steering
VOD stands for ___________ and may be used in lieu of or in conjunction with asset statements provided by the applicant. VODs are sent to and completed by the financial institution(s) where the applicant’s assets are located.
verification of deposit
TILA permits the waiver of a right to rescind in the presence of a ______________ as long as all parties to the transaction request the waiver in writing and clearly demonstrate the ___________________.
bona fide financial emergency
bona fide financial emergency
Disclosure of the APR is only required upon advertising a particular ________ not ______________.
interest rate
payment amount
VOD stands for verification of deposit and may be used in lieu of or in conjunction with __________ provided by the applicant. VODs are sent to and completed by the financial institution(s) where the applicant’s assets are located.
asset statements
The SAFE Act does not impose a _________ for regulatory violations. Different violations carry different sanctions.
specific fine
12 CFR § 1026.26 mandates that if a consumer orally asks about the cost of the credit, the lender must state the ______. For closed-ended credit, he or she may also give a ______ or _______ interest rate that is applied to an unpaid balance. If a lender cannot determine the APR for the specific closed-ended credit about which he or she is being asked, he or she may instead disclose the APR in a ________ transaction.
APR
periodic
simple
sample
When an existing law is amended or when new legislation is passed, Regulation H addresses these circumstances by requiring that the Bureau be notified any time a state enacts legislation that affects its compliance with the SAFE Act. The CFPB may ask that the state submit _______ that its law is in compliance with the SAFE Act, for citations to relevant state laws and regulations, for information on the state regulator’s __________, and for data on the state regulator’s investigations, __________, and enforcement actions.
evidence
supervisory processes
examinations
Regulation V, which encapsulates the _________, requires that CRA’s protect the privacy of consumers in a credit transaction. That is why ________ to access credit along with a __________ is always required from anyone seeking to access someone’s credit data.
FCRA
permission
permissible purpose
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 current.
77%
RESPA strictly prohibits fee splitting unless the parties splitting the fee have performed enough work to earn the fee. _________ earned must be commensurate with the _________________.
Income
amount of work performed
________ enacted ECOA in ________ in order to eliminate discriminatory treatment of credit applicants.
Congress
1974
Lending transactions originated through state agencies are not subject to rights of rescission. Neither are loans to refinance the original loan through ______________.
the original lender
Unless the loan is for an “income sensitive” product such as certain community lending products, USDA, or a state bond program, the applicant is never required to disclose the earnings of alimony, child support, or separate maintenance when it comes to the mortgage application. In fact, all applicants, aside from those applying for certain community lending products, state bond, or USDA loans must be made aware that the disclosure of this income is voluntary. If an applicant _______ to disclose it, however, the income must be ________, a history of receipt established, and a continuance demonstrated.
opts
court ordered
________ lending considers the amount of equity a borrower has in their property and becomes the primary factor on which the lender approves the applicant’s loan application. The more equity, the _______ risk that the investor would have in losing their investment in the event of foreclosure. Other qualificational considerations may become irrelevant.
Equity-based
less
__________ rates are initial ARM rates that are more than 3% below the FIAR applicable at the time of rate lock. Often these rates are considerably low and ultimately adjust dramatically. Although the borrower should always understand the potential for worst-case scenario, the Statement did not pose comment regarding the use of ________ rates.
Teaser
teaser
When a loan contract contains a pre-payment penalty, it typically calculates a penalty based on an established percentage of the ______________
amount pre-paid.
The Statement on Subprime Lending defines an individual as a credit risk if their credit history reflects two or more 30-day delinquencies within the prior 12-month period, one or more 60-day delinquencies within the prior 24 months, _________, ___________, or __________ within the prior 24 months, bankruptcy within the previous five years, having a credit score representing a high risk of default, or a debt-to-income ratio of 50% or higher.
foreclosure
repossession
charge-off
Any debt that could appear on a traditional credit report is considered ___________. Non-traditional credit consists of a minimum collection of four credit accounts, often utilities or anything paid monthly, that would not normally appear on a traditional credit report. Non-traditional credit is often used when an applicant does not have sufficient credit to warrant a standard credit review. Non-traditional credit requires at least one tradeline to be __________ related.
traditional credit
housing
The HPA exempts FHA or VA loans from consideration because FHA loans utilize ________ not PMI and the VA utilizes a ___________ and not PMI. Loans containing lender paid mortgage insurance involve the lender paying the PMI in exchange for the customer accepting a higher interest rate.
MIP
funding fee
One of the definitions of a creditor is a lender that extends credit payable through a written agreement requiring repayment in more than ______ installments.
four
The FHA, VA, and some ARMs are assumable because they lack a due-on-demand or __________. The traditional conventional loan contains an __________ and is therefore not assumable.
alienation clause
alienation clause
Teaser rates are initial ARM rates that are more than ______% below the FIAR applicable at the time of rate lock. Often these rates are considerably low and ultimately adjust dramatically. Although the borrower should always understand the potential for ________ scenario, the Statement did not pose comment regarding the use of teaser rates.
3%
worst-case
TILA permits the _____________ in the presence of a bona fide financial emergency as long as _______________ request the waiver in writing and clearly demonstrate the bona fide financial emergency.
waiver of a right to rescind
all parties to the transaction
Payment shock concerns itself with the borrower’s ______ housing expense and their ________ housing expense. If an individual’s housing expense increases significantly beyond what they’re currently paying, they might ultimately experience difficulty making their payments.
current
proposed
The FHA, VA, and some ARMs are assumable because they lack a due-on-demand or alienation clause. The ___________ loan contains an alienation clause and is therefore not assumable.
traditional conventional
Higher-priced mortgage loans (HMPLs) are described in TILA Section 35. A mortgage is a higher-priced mortgage loan when it is secured by a borrower’s principal dwelling and has an APR exceeding the average prime offer rate (APOR) by 1.5% for _________ as of the interest rate lock date and 3.5% for ____________ or where the APR exceeds the average prime offer rate (APOR) by 2.5% in the case of _______________.
first lien loans
subordinate lien loans
first lien jumbo loans
The ____________ is the investment portion of the ARM rate and the part that periodically fluctuates. The _______ represents the fixed, lender/investor operating costs and profit margin. Together they constitute the ______________.
index
margin
fully indexed accrual rate (FIAR)
A housing finance agency is any authority whose activities make it eligible to be a member of the _____________ and that is chartered by a state to help meet the affordable housing needs of the residents of the state, supervised directly or indirectly by the state government, and subject to _________ by the state in which it operates.
National Council of State Housing Agencies
audit and review
The six pieces of information that constitute a complete mortgage application, in accordance with RESPA, are: the applicant’s name, their social security number, their ____________, the property’s address, the __________________, and the loan amount.
monthly income
property’s estimated value or purchase price
Charging higher interest rates to someone with a ___________ offsets risk and is therefore acceptable as long as the higher rate doesn’t violate other regulatory considerations and the borrower is still able to afford the payments.
lower credit score
If an applicant exercises his or her right to rescind, all monies paid into the transaction must be _________, even if they were spent on legitimate third-party settlement expenses such as an _________ and/or a _____________. The lender must refund this money within 20 calendar days of the date of rescission.
refunded
appraisal
credit report
A triggering term refers to any term used in an advertisement that triggers the need for ______ and ________ disclosure of the fine print.
clear
conspicuous
The _____________ defines an individual as a credit risk if their credit history reflects two or more 30-day delinquencies within the prior 12-month period, one or more 60-day delinquencies within the prior 24 months, foreclosure, repossession, or charge-off within the prior 24 months, bankruptcy within the previous five years, having a credit score representing a high risk of default, or a debt-to-income ratio of 50% or higher.
Statement on Subprime Lending
A ____________ refers to any term used in an advertisement that _________ the need for clear and conspicuous disclosure of the fine print.
triggering term
triggers
___________ permits the waiver of a right to rescind in the presence of a bona fide financial emergency as long as all parties to the transaction request ____________ and clearly demonstrate the bona fide financial emergency.
TILA
the waiver in writing
FCRA allows anyone denied credit, due to credit-related reasons, the right to receive a free copy of their credit report. Consequently, if an application is denied due to __________, the creditor must provide the applicant with the name and address of the applicable credit repository. The reason for declination and a description of the credit are requirements of __________ and disclosure of the credit score is required through _____________.
credit issues
ECOA
FACTA
Congress enacted ________ in 1974 in order to eliminate discriminatory treatment of credit applicants.
ECOA
In certain states, a spouse may have ___________ to a property owned by his or her spouse even if his or her name is not on the deed or when he or she is not ___________. In cases where an applicant is either married or separated, state marital laws may require the involvement of the spouse even if the spouse is not an applicant or listed on the title and deed.
ownership rights
obligated to the debt
The six pieces of information that constitute a complete mortgage application, in accordance with RESPA, are: the applicant’s name, their ______________, their monthly income, the ________________, the property’s estimated value or purchase price, and the loan amount.
social security number
property’s address
RESPA Section _____ prohibits anything of value from being exchanged between actual or potential referral sources.
8
Even if an applicant is not expected to outlive the mortgage term, denying the application on solely that basis is an example of ageism and exemplifies a prohibited characteristic by definition of ___________.
ECOA
If a loan meets the criteria of TILA Section 32, a disclosure must be issued to the applicants informing them that, just because they may have _________ and ____________, they are not required to consummate the mortgage transaction.
signed disclosures
completed an application
The Statement on Subprime Lending defines an individual as a credit risk if their credit history reflects two or more 30-day delinquencies within the prior ______-month period, one or more 60-day delinquencies within the prior ______ months, foreclosure, repossession, or charge-off within the prior ______ months, bankruptcy within the previous five years, having a credit score representing a high risk of default, or a debt-to-income ratio of 50% or higher.
12
24
24
The Statement on Subprime Lending defines an individual as a credit risk if their credit history reflects ______ or more 30-day delinquencies within the prior 12-month period, _______ or more 60-day delinquencies within the prior 24 months, foreclosure, repossession, or charge-off within the ________, bankruptcy within the previous __________, having a credit score representing a high risk of default, or a debt-to-income ratio of 50% or higher.
two
one
prior 24 months
five years
______ requires that a revised closing disclosure be issued and an additional three-day waiting period implemented if the APR at the time of closing deviates from the APR on the final CD by more than 0.125%.
TRID
If an applicant exercises his or her right to _________, all monies paid into the transaction must be refunded, even if they were spent on legitimate third-party settlement expenses such as an appraisal and/or a credit report. The lender must refund this money within 20 calendar days of the date of __________.
rescind
rescission
TILA does not apply to business, agricultural, or ____________ credit.
organizational
The model state legislation provides that the maximum amount of penalty for each act or omission for a Loan Originator is $_________. Each violation or failure to comply with any directive or order of the state licensing authority is a separate and distinct violation or failure.
$25,000
Above-par pricing is allowed as long as the borrower qualifies at the higher rate, is aware of the higher-than-par rate and receives _______% of the above-par revenue.
100%
The HPA exempts _______ or ________ loans from consideration because _______ loans utilize MIP not PMI and the ________ utilizes a funding fee and not PMI. Loans containing lender paid mortgage insurance involve the lender paying the PMI in exchange for the customer accepting a higher interest rate.
FHA
VA
FHA
VA
In accordance with HMDA, a mortgage applicant may choose or refuse to disclose his or her sex. In the event that he or she refuses to do so and the application has been conducted in a ___________ capacity, the loan originator would have to document the applicant’s sex based on visual observation or surname.
face-to-face
The Guidance on Nontraditional Mortgage Product Risks resulted from a joint study conducted by the _________ and the ___________ which reviewed the mortgage industry and the products it was offering. It identified the potential problems associated with nontraditional mortgages and recommended stronger loan terms and underwriting standards, caution regarding the layering of risk when analyzing creditworthiness, and ways in which consumers needed to be protected from unscrupulous mortgage professionals.
CSBS
AARMR
ECOA requires that all mortgage loan applications be formally decisioned within _______ days from the date of application. If, by the _____th day, the lender lacks the documentation permitting it to render a formal decision, it must issue the applicant a Notice of Incomplete Application itemizing all of the outstanding material and designating a specific timeframe by which the applicant must remit the material. If, after the designated timeframe elapses the lender is still without the required material, it will simply withdraw the applicant’s loan application.
30
30th
Although an interest-only loan should never be used to qualify for a larger loan amount, the real concern is the possibility of ____________ when the loan becomes fully amortizing.
payment shock
A ________ period is the period for which the lender guarantees a particular price. The shorter the timeframe from interest rate lock to loan funding, the lower the cost because the lender is reserving the money for a shorter period of time.
lock-in
Payment shock concerns itself with the borrower’s current __________ and their proposed _________. If an individual’s ___________ increases significantly beyond what they’re currently paying, they might ultimately experience difficulty making their payments.
housing expense
housing expense
housing expense
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
VOD stands for verification of deposit and may be used in lieu of or in conjunction with asset statements provided by the applicant. VODs are sent to and completed by the___________ where the applicant’s assets are located.
financial institution(s)
The Mortgage does not reference any indication of a pre-payment penalty as it is simply the document that establishes ________. The LE, CD, and Promissory Note would all reference any pre-payment penalty applicable to the loan being originated.
the lien
12 CFR § 1026.26 mandates that if a consumer orally asks about the cost of the credit, the lender must state the APR. For ______-ended credit, he or she may also give a periodic or simple interest rate that is applied to an unpaid balance. If a lender cannot determine the APR for the specific _______-ended credit about which he or she is being asked, he or she may instead disclose the APR in a sample transaction.
closed
closed
On a 10/1 ARM with a ten-year interest-only term, If the borrower pays the minimum payment billed, he will be paying only the interest due and will not reduce his _________. Therefore, after ten years when his loan becomes fully-amortizing, his balance will be at the ____________ with twenty years remaining.
principal balance
original loan amount
Lien-theory states utilize the ________ as their security instrument with default leading to a judicial foreclosure. Title-theory states utilize the ___________ as their security instrument with default leading to a non-judicial foreclosure.
Mortgage
Deed-of-Trust (or Trust Deed)
TRID requires that a revised closing disclosure be issued and an ___________ waiting period implemented if the APR at the time of closing deviates from the APR on the final CD by more than 0.125%.
additional three-day
The HPA exempts FHA or VA loans from consideration because FHA loans utilize MIP not PMI and the VA utilizes a funding fee and not PMI. Loans containing _______________ involve the lender paying the PMI in exchange for the customer accepting a higher interest rate.
lender paid mortgage insurance
Since the parties interacting through video conferencing can see and hear each other, the application is treated the same as a face-to-face application in terms of __________ government monitoring disclosure requirements.
HMDA’s
The LE and CD disclose the _______________ as being the cost of originating the loan expressed as an interest rate and the _______________ as being the cost of originating the loan expressed as a dollar amount.
Annual Percentage Rate (APR)
Finance Charge
Lien-theory states utilize the Mortgage as their security instrument with default leading to a __________ foreclosure. Title-theory states utilize the Deed-of-Trust (or Trust Deed) as their security instrument with default leading to a _________ foreclosure.
judicial
non-judicial
In accordance with HMDA, a mortgage applicant may choose or refuse to disclose his or her sex. In the event that he or she refuses to do so and the application has been conducted in a face-to-face capacity, the loan originator would have to document the applicant’s sex based on ____________ or ______________.
visual observation
surname
If a loan meets the criteria of TILA Section 32, a disclosure must be issued to the applicants informing them that, just because they may have signed disclosures and completed an application, they are not required to _________________.
consummate the mortgage transaction
In accordance with ________, a mortgage applicant may choose or refuse to disclose his or her sex. In the event that he or she refuses to do so and the application has been conducted in a face-to-face capacity, the loan originator would have to document the applicant’s sex based on visual observation or surname.
HMDA
If the finance charge at closing is more than $100 above or below the finance charge appearing on the final CD, the lender must re-disclose the CD and wait _____________ before closing.
an additional three days
One of the definitions of a creditor is a lender that extends credit payable through a __________ requiring repayment in more than four installments.
written agreement
Fiduciary responsibility deems the mortgage professional responsible for looking out for the customer’s ___________. If a loan originator is able to charge a higher interest rate in order to receive a higher commission, he might not be incentivized to get the customer the best possible pricing.
best interests
Regulation ______, which encapsulates the FCRA, requires that CRA’s protect the ________ of consumers in a credit transaction. That is why permission to access credit along with a permissible purpose is always required from anyone seeking to access someone’s credit data.
V
privacy
__________ refers to the borrower’s ability to repay the loan. In considering whether or not a particular loan is suitable for a particular borrower, the lender must be confident that the borrower will be able to comfortably manage the payments.
Loan suitability
If a primary mortgage experiences ____________, the balance grows. If there is a lien in a subordinate position, the subordinate lienholder’s equity stake is reduced with each __________ to the primary loan’s balance.
negative amortization
increase
CHARM stands for the ________________ and is required to be issued to an applicant within three business days of applying for a closed-ended ARM.
Consumer Handbook on Adjustable Rate Mortgages
The ________ includes costs of originating the loan incurred by the borrower. If the seller pays for the discount points, they would not be a part of the borrower’s costs and therefore not a part of the ________.
finance charge
finance charge
The six pieces of information that constitute a complete mortgage application, in accordance with RESPA, are: the applicant’s _________, their social security number, their monthly income, the property’s address, the property’s estimated value or purchase price, and the _________.
name
loan amount
________ financing involves an applicant applying for a first mortgage at 80% LTV as well as a secondary loan for the difference between the 80% first mortgage and their down payment. By limiting the first mortgage to 80%, the lender would not require PMI. A common example is an 80/10/10 which involves an 80% first mortgage, a 10% second mortgage, and a 10% down payment.
Piggyback
TRID requires that a revised closing disclosure be issued and an additional three-day waiting period implemented if the APR at the time of closing deviates from the APR on the final CD by more than ______%.
0.125%
Even if an applicant is not expected to outlive the mortgage term, denying the application on solely that basis is an example of _________ and exemplifies a prohibited characteristic by definition of ECOA.
ageism
If a primary mortgage experiences negative amortization, the balance ________. If there is a lien in a subordinate position, the subordinate lienholder’s equity stake is ________ with each increase to the primary loan’s balance.
grows
reduced
A ___________ is an income stream earned from the repayment of a debt someone owes to the note holder. If a 12-consecutive-or-greater monthly payment history can be demonstrated along with evidence of a minimum three-year continuance, the note receivable may be considered as income.
note receivable
Piggyback financing involves an applicant applying for a first mortgage at 80% LTV as well as a secondary loan for the difference between the 80% first mortgage and their down payment. By limiting the first mortgage to 80%, the lender would not require _______. A common example is an 80/10/10 which involves an 80% first mortgage, a 10% second mortgage, and a 10% down payment.
PMI
Loan suitability refers to the borrower’s __________ the loan. In considering whether or not a particular loan is suitable for a particular borrower, the lender must be confident that the borrower will be able to comfortably manage the payments.
ability to repay
The ____________ offered no cautionary advice regarding failing to offer multiple loan products. Instead, it focused on mortgage professional training, the oversight of third-party settlement providers, and fair compensation by discouraging product steering. In fact, the Federal Reserve acted against product steering when it ratified a final rule prohibiting it on ___________.
Statement on Subprime Lending
April 1, 2011
A note receivable is an income stream earned from the repayment of a debt someone owes to the note holder. If a ____________ monthly payment history can be demonstrated along with evidence of a minimum _______-year continuance, the note receivable may be considered as income.
12-consecutive-or-greater
three
MIP is associated with FHA loans and is automatically removed after 11 years assuming that the borrower’s initial down payment was _____% or more.
10%
For a borrower to successfully petition their mortgage servicer for the removal of PMI once their loan reaches an 80% LTV, among other considerations, they must be able to demonstrate that they have a good payment history. A good payment history involves a 24-month review of the borrower’s mortgage payments during which there may be no _____-day late payments and no 30-day late payments within the most recent ______ months.
60
12
TILA does not apply to ________, agricultural, or organizational credit.
business
12 CFR §1026.19 requires lenders to disclose to ARM applicants pertinent information pertaining to the loan rate’s _____, _______, and ____________.
index
margin
frequency of adjustments
TILA mandates the issuance of the ___________within three days of the application of all closed-ended ARMs. The Mortgage Servicing Disclosure Statement and Transfer of Servicing Disclosure are requirements of RESPA and the Notice of Action Taken is an ECOA mandate.
CHARM booklet
The _________ exempts FHA or VA loans from consideration because FHA loans utilize MIP not PMI and the VA utilizes a funding fee and not PMI. Loans containing lender paid mortgage insurance involve the lender paying the PMI in exchange for the customer accepting a higher interest rate.
HPA
Although an interest-only loan should never be used to qualify for a larger loan amount, the real concern is the possibility of payment shock when the loan becomes ______________.
fully amortizing
In accordance with (12 USC § 5107(d); 12 CFR §1008.115), the SAFE Act gives the _________ authority to determine whether a state has adopted laws that satisfy the SAFE Act licensing requirements. Regulation H establishes a procedure for the CFPB to follow if it makes a determination of __________.
Director of the CFPB
noncompliance
In the face of imminent foreclosure, a homeowner may simply elect to _______ his or her home by signing the _______ over to the lender known as “deed-in-lieu of foreclosure” thereby avoiding a lengthy and costly foreclosure process.
surrender
deed
The FHA, VA, and some ARMs are ________ because they lack a due-on-demand or alienation clause. The traditional conventional loan contains an alienation clause and is therefore not ___________.
assumable
assumable
The FHA, VA, and some ARMs are assumable because they lack a _________ or alienation clause. The traditional conventional loan contains an alienation clause and is therefore not assumable.
due-on-demand
The finance charge includes costs of _______ the loan incurred by the _______. If the seller pays for the discount points, they would not be a part of the borrower’s costs and therefore not a part of the finance charge.
originating
borrower
Even if the loan originator does not agree with the applicant, the applicant always and ultimately ____________ upon the mortgage program for which he or she applies.
decides
A lock-in period is the period for which the lender _________ a particular price. The shorter the timeframe from interest rate lock to loan funding, the _______ the cost because the lender is reserving the money for a shorter period of time.
guarantees
lower
Unlike its fixed-rate counterpart, when principal pre-payments are allocated against an adjustable-rate mortgage balance, the _______ is never affected, the future ___________ is. Whenever an interest rate adjustment occurs, the mortgage servicer recalculates the next periodic payment based on the current balance, applicable interest rate, and remaining term.
term
payment amount
FCRA allows anyone denied credit, due to credit-related reasons, the right to receive a _________ of their credit report. Consequently, if an application is denied due to credit issues, the creditor must provide the applicant with the name and address of the applicable credit repository. The _____________ and a ______________ are requirements of ECOA and ________________ is required through FACTA.
free copy
reason for declination
description of the credit
disclosure of the credit score
_________ mandates the issuance of the CHARM booklet within three days of the application of all closed-ended ARMs. The Mortgage Servicing Disclosure Statement and Transfer of Servicing Disclosure are requirements of _________ and the Notice of Action Taken is an ________ mandate.
TILA
RESPA
ECOA
The LE and CD disclose the Annual Percentage Rate (APR) as being the cost of originating the loan expressed as ___________ and the Finance Charge as being the cost of originating the loan expressed as ____________
an interest rate
a dollar amount.
______________ are described in TILA Section 35. A mortgage is a ___________ mortgage loan when it is secured by a borrower’s principal dwelling and has an APR exceeding the average prime offer rate (APOR) by 1.5% for first lien loans as of the interest rate lock date and 3.5% for subordinate lien loans or where the APR exceeds the average prime offer rate (APOR) by 2.5% in the case of first lien jumbo loans.
Higher-priced mortgage loans (HMPLs)
higher-priced
The _________ does not reference any indication of a pre-payment penalty as it is simply the document that establishes the lien. The LE, CD, and Promissory Note would all reference any pre-payment penalty applicable to the loan being originated.
Mortgage
The Tax Reform Act of 1986 eliminated the tax ____________ of interest paid through ___________ debt. As such, it stimulated home financing by causing people to refinance their ___________ into their mortgages thereby re-establishing interest deductibility.
deductibility
non-secured
unsecured debt
Under the HPA, a mortgage servicer must refund any “________” PMI premium within 45 days of its receipt.
unearned
Even if an applicant is not expected to outlive the mortgage term, denying the application on solely that basis is an example of _________ and exemplifies a prohibited characteristic by definition of ECOA.
ageism
Piggyback financing involves an applicant applying for a first mortgage at ______% LTV as well as a secondary loan for the difference between the ______% first mortgage and their down payment. By limiting the first mortgage to _______%, the lender would not require PMI. A common example is an 80/10/10 which involves an 80% first mortgage, a 10% second mortgage, and a 10% down payment.
80%
80%
80%
The ______________ eliminated the tax deductibility of interest paid through non-secured debt. As such, it stimulated home financing by causing people to refinance their unsecured debt into their mortgages thereby re-establishing interest deductibility.
Tax Reform Act of 1986
A mortgage professional should always trust their instincts and _____________. Something seeming too good to be true or not right should always warrant additional scrutiny and investigation.
common sense
Higher-priced mortgage loans (HMPLs) are described in TILA Section 35. A mortgage is a higher-priced mortgage loan when it is secured by a borrower’s principal dwelling and has an APR exceeding the average prime offer rate (APOR) by ____% for first lien loans as of the interest rate lock date and ______% for subordinate lien loans or where the APR exceeds the average prime offer rate (APOR) by ______% in the case of first lien jumbo loans.
- 5%
- 5%
- 5%
In a face-to-face transaction when the applicant agrees to self-identify, he or she is asked to ____________ himself or herself based on his or her designation. Specifically, if an applicant voluntarily defines himself or herself as Native Hawaiian or Other Pacifica Islander, he or she will be asked to sub-categorize that identification as Native Hawaiian, Guamanian or Chamorro, Samoan, or Other Pacific Islander.
sub-categorize
_______-theory states utilize the Mortgage as their security instrument with default leading to a judicial foreclosure. ______-theory states utilize the Deed-of-Trust (or Trust Deed) as their security instrument with default leading to a non-judicial foreclosure.
Lien
Title
The Guidance on Nontraditional Mortgage Product Risks resulted from a joint study conducted by the CSBS and the AARMR which reviewed the mortgage industry and the products it was offering. It identified the potential problems associated with nontraditional mortgages and recommended stronger ___________ and __________ standards, caution regarding the _________ when analyzing creditworthiness, and ways in which consumers needed to be protected from unscrupulous mortgage professionals.
loan terms
underwriting
layering of risk
_________ mandates that, in order to access someone’s credit profile, the individual accessing it must first have permission as well as a permissible purpose to do so. Completing a ________ constitutes both but, in cases where the credit is pulled without the completion of a _________, the individual accessing the credit profile must be able to demonstrate having both.
FCRA
URLA
URLA
For a borrower to successfully petition their mortgage servicer for the removal of PMI once their loan reaches an 80% LTV, among other considerations, they must be able to demonstrate that they have a good payment history. A good payment history involves a _______-month review of the borrower’s mortgage payments during which there may be no 60-day late payments and no ______-day late payments within the most recent 12 months.
24
30
Although all answer options are important to discuss, at any time when a borrower is considering an ARM, the loan originator should make certain that the borrower is aware of, accepting, and qualified for ______________. Even if unlikely to occur, the borrower should be prepared for ____________ or it would be advisable for them to consider a different option.
worst-case scenario
worst-case scenario
If a borrower is unable to continue remitting payments under his or her loan’s current terms, the lender might agree to modify the loan in order to make it more palatable and avoid foreclosure. Ways in which the loan can be modified include __________ and/or ___________.
reducing the interest rate
extending the loan term
The ___________ resulted from a joint study conducted by the CSBS and the AARMR which reviewed the mortgage industry and the products it was offering. It identified the potential problems associated with nontraditional mortgages and recommended stronger loan terms and underwriting standards, caution regarding the layering of risk when analyzing creditworthiness, and ways in which consumers needed to be protected from unscrupulous mortgage professionals.
Guidance on Nontraditional Mortgage Product Risks
Unless the loan is for an “__________” product such as certain community lending products, USDA, or a state bond program, the applicant is never required to disclose the earnings of alimony, child support, or separate maintenance when it comes to the mortgage application. In fact, all applicants, aside from those applying for certain community lending products, state bond, or USDA loans must be made aware that the disclosure of this income is voluntary. If an applicant opts to disclose it, however, the income must be court ordered, a history of receipt established, and a continuance demonstrated.
income sensitive
The index is the _________ portion of the ARM rate and the part that periodically fluctuates. The margin represents the fixed, ____________________. Together they constitute the fully indexed accrual rate (FIAR).
investment
lender/investor operating costs and profit margin
Marking up refers to the illegal practice of charging a borrower more for a third-party settlement fee than the settlement service provider charged and retaining the difference. ________ prohibits markups.
RESPA
________ is a loan scenario where, to qualify, the borrower simply states his or her income while their assets are verified.
SIVA
FCRA mandates that, in order to access someone’s credit profile, the individual accessing it must first have ___________ as well as a ____________ to do so. Completing a URLA constitutes both but, in cases where the credit is pulled without the completion of a URLA, the individual accessing the credit profile must be able to demonstrate having both.
permission
permissible purpose
When a loan contract contains a pre-payment penalty, it typically calculates a penalty based on an established __________ of the amount pre-paid.
percentage
TILA does not apply to business, _________, or organizational credit.
agricultural
Under the HPA, a mortgage servicer must refund any “unearned” PMI premium within _____ days of its receipt.
45
Payment caps prevent the mortgage servicer from demanding a payment amount beyond the established payment cap regardless of the true payment due. It can often lead to ________________.
negative amortization
If the finance charge at closing is more than $_____ above or below the finance charge appearing on the final CD, the lender must re-disclose the CD and wait an additional three days before closing.
$100
MIP is associated with FHA loans and is automatically removed after _____ years assuming that the borrower’s initial down payment was 10% or more.
11
Only ___________, __________ mortgage transactions contain a right of rescission.
primary-residential
non-purchase
No __________ may write a consumer report containing outdated financial information such as bankruptcies over ten years old and other negative information such as consumer account delinquencies, paid tax liens, and satisfied civil judgments that are more than seven years old unless the reporting relates to a credit transaction involving a principal amount of $150,000 or more.
CRA
Congress enacted ECOA in 1974 in order to eliminate ______________ of credit applicants.
discriminatory treatment
A __________ mortgage collects one half of a monthly payment every other week. Since there are 26 bi-weekly payments in each calendar year, ________ extra monthly payment is collected and applied to principal annually thereby reducing the term of the loan.
bi-weekly
one
To be conforming, a mortgage loan must “conform” to Fannie Mae’s (FNMA’s) or Freddie Mac’s (FHLMC’s) underwriting parameters as well as Federal Housing Finance Agency (FHFA)-established annual loan limits. ______ & ______ loan parameters do not conform to FNMA or FHLMC underwriting parameters rendering those loans non-conforming.
FHA
VA
Mortgage processors and underwriters are not required to hold an MLO license unless acting in the capacity of a ___________ processor or underwriter.
contract (1099)
__________ refers to the illegal practice of charging a borrower more for a third-party settlement fee than the settlement service provider charged and retaining the difference. RESPA prohibits ______.
Marking up
markups
In certain states, a spouse may have ownership rights to a property owned by his or her spouse even if his or her name is not on the ____________ or when he or she is not obligated to the debt. In cases where an applicant is either married or separated, _________ laws may require the involvement of the spouse even if the spouse is not an applicant or listed on the title and deed.
deed
state marital
Unless the loan is for an “income sensitive” product such as certain community lending products, USDA, or a state bond program, the applicant is never required to disclose the earnings of _______, __________, or __________ when it comes to the mortgage application. In fact, all applicants, aside from those applying for certain community lending products, state bond, or USDA loans must be made aware that the disclosure of this income is ___________. If an applicant opts to disclose it, however, the income must be court ordered, a history of receipt established, and a continuance demonstrated.
alimony
child support
separate maintenance
voluntary
Disclosure of the ______ is only required upon advertising a particular interest rate not payment amount.
APR
Lending transactions originated through ___________ are not subject to rights of rescission. Neither are loans to refinance the original loan through the original lender.
state agencies
The Guidance would not have discussed considerations of a ____________________.
standard 30-year fixed-rate mortgage
TRID requires that a ___________ be issued and an additional three-day waiting period implemented if the APR at the time of closing deviates from the APR on the final CD by more than 0.125%.
revised closing disclosure
__________ is the process by which a loan matures. Based on the interest rate, loan term, and original mortgage amount, the P&I payment is established and, with each payment received, more of that payment is allocated against principal and less to interest.
Amortization
If a loan meets the criteria of TILA Section _____, a disclosure must be issued to the applicants informing them that, just because they may have signed disclosures and completed an application, they are not required to consummate the mortgage transaction.
32
The ________ or ___________ is the document on which anyone with an ownership interest in a property acknowledges their consent to the attachment of an enforceable lien to that property. The ___________ is the document through which the borrower obligates himself or herself to the debt.
Mortgage
Deed-of-Trust
Promissory Note
Loan decisioning timeframes are established by _________ not FCRA. Verbal or written permission is acceptable in order to secure a credit report. The completion of a ____________ constitutes written permission. Creditors are required to amend previously-reported information when a correction or removal is warranted. Knowingly reporting inaccurate information is a violation of FCRA.
ECOA
URLA
A mortgage servicer may collect funds for the purpose of remitting escrow items and keep them in a collective account as long as a complete accounting is kept of all funds and no other funds for any other purpose are __________ into that account
comingled
A ____________ is any authority whose activities make it eligible to be a member of the National Council of State Housing Agencies and that is chartered by a state to help meet the affordable housing needs of the residents of the state, supervised directly or indirectly by the ___________, and subject to audit and review by the state in which it operates.
housing finance agency
state government
For a borrower to successfully petition their mortgage servicer for the removal of PMI once their loan reaches an _______% LTV, among other considerations, they must be able to demonstrate that they have a good _________ history. A good payment history involves a 24-month review of the borrower’s mortgage payments during which there may be no 60-day late payments and no 30-day late payments within the most recent 12 months.
80%
payment
When a loan contract contains a ____________, it typically calculates a penalty based on an established percentage of the amount pre-paid.
pre-payment penalty
Unlike its fixed-rate counterpart, when principal pre-payments are allocated against an adjustable-rate mortgage balance, the term is never affected, the future payment amount is. Whenever an interest rate adjustment occurs, the mortgage servicer ___________ the next periodic payment based on the current balance, applicable interest rate, and remaining term.
recalculates
Amortization is the process by which a loan _________. Based on the interest rate, loan term, and original mortgage amount, the P&I payment is established and, with each payment received, more of that payment is allocated against ________ and less to _________.
matures
principal
interest
If a borrower is unable to continue remitting payments under his or her loan’s current terms, the lender might agree to ________ the loan in order to make it more palatable and avoid foreclosure. Ways in which the loan can be _______ include reducing the interest rate and/or extending the loan term.
modify
modified
The issuance of a CD no later than three days prior to closing is a requirement of the _________ not the HPA.
TRID
When allocating principal pre-payments against a fixed rate loan, the periodic payment amount due on the loan _________ changes. Since the balance is _______ than it otherwise would be after the application of a payment directly to principal and considering that the same periodic payment amount is continually remitted, the loan pays off sooner than it would otherwise thereby saving the borrower time on the loan and interest spent while causing them to gain equity more rapidly.
never
lower
To be conforming, a mortgage loan must “conform” to __________ or __________ underwriting parameters as well as _______________ established annual loan limits.
Fannie Mae’s (FNMA’s)
Freddie Mac’s (FHLMC’s)
Federal Housing Finance Agency (FHFA)-
_______ income tax returns are never used to determine an applicant’s income. Bank statements reflecting pay deposits, pay stubs, W-2 forms, 1099 forms, and _______ income tax returns are some of the documents used to substantiate an applicant’s income.
State
federal
Teaser rates are initial ARM rates that are more than 3% below the _______ applicable at the time of ________. Often these rates are considerably low and ultimately adjust dramatically. Although the borrower should always understand the potential for worst-case scenario, the Statement did not pose comment regarding the use of teaser rates.
FIAR
rate lock
Loan decisioning timeframes are established by ECOA not FCRA. _______ or _________ permission is acceptable in order to secure a credit report. The completion of a URLA constitutes written permission. Creditors are required to amend __________ information when a correction or removal is warranted. Knowingly reporting inaccurate information is a violation of ___________.
Verbal
written
previously-reported
FCRA
Even if an applicant is not expected to outlive the mortgage term, denying the application on solely that basis is an example of ageism and exemplifies a prohibited characteristic by definition of _________.
ECOA
If a licensee’s license is revoked in a particular state, there is little likelihood that a license application will be __________ in another state.
approved
CHARM stands for the Consumer Handbook on Adjustable Rate Mortgages and is required to be issued to an applicant within three business days of applying for a ______________.
closed-ended ARM
___________ allows anyone denied credit, due to credit-related reasons, the right to receive a free copy of their credit report. Consequently, if an application is denied due to credit issues, the creditor must provide the applicant with the __________________. The reason for declination and a description of the credit are requirements of ECOA and disclosure of the credit score is required through FACTA.
FCRA
name and address of the applicable credit repository
CHARM stands for the Consumer Handbook on Adjustable Rate Mortgages and is required to be issued to an applicant within _______ business days of __________ a closed-ended ARM.
three
applying for
Although a mortgage loan originator must ask an applicant about his or her marital status, he or she may only ask the applicant if he or she is ______, _______, or ________. Delving deeper into an applicant’s marital status could constitute an ECOA violation.
married
separated
unmarried
____________ prevent the mortgage servicer from demanding a payment amount beyond the established __________ regardless of the true payment due. It can often lead to negative amortization.
Payment caps
payment cap
Any debt that could appear on a traditional __________ is considered traditional credit. Non-traditional credit consists of a minimum collection of _______ credit accounts, often utilities or anything paid monthly, that would not normally appear on a traditional credit report. Non-traditional credit is often used when an applicant does not have sufficient credit to warrant a standard credit review. Non-traditional credit requires at least _____ tradeline to be housing related.
credit report
four
one
SIVA is a loan scenario where, to qualify, the borrower simply ______ his or her income while their assets are ________.
states
verified
On a 10/1 ARM with a ten-year interest-only term, If the borrower pays the minimum payment billed, he will be paying only the interest due and will not reduce his principal balance. Therefore, after ten years when his loan becomes __________, his balance will be at the original loan amount with ________ years remaining.
fully-amortizing
twenty
RESPA strictly prohibits fee splitting unless the parties splitting the fee have ______________ the fee. Income earned must be commensurate with the amount of work performed.
performed enough work to earn
____________ prohibits misleading advertising practices. If an adjustable interest rate is referenced in an advertisement, it must be referred to as such.
TILA (Reg Z)
The Mortgage or Deed-of-Trust is the document on which anyone with an ownership interest in a property acknowledges their consent to the attachment of an ___________ to that property. The Promissory Note is the document through which the borrower _______ himself or herself to __________.
enforceable lien
obligates
the debt
