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No CRA may write a consumer report containing outdated financial information such as bankruptcies over ________ years old and other negative information such as consumer account delinquencies, paid tax liens, and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
