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NMLS-Exam > Exam-General Mortgage Knowledge > Flashcards

Exam-General Mortgage Knowledge Flashcards

1
Q

A 360/180 best describes what type of loan?

a. Balloon
b. Subprime
c. ARM
d. FHA

A

a.Balloon

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2
Q

A 5/23 or 7/23 is what type of mortgage:

a) Bridge Loan
b) Interest-Only Loan
c) Hybrid ARM
d) Balloon Mortgage

A

d) Balloon Mortgage

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3
Q

A discount point is best described as a charge that the borrower pays to:

a) a lender to decrease the interest rate on a mortgage loan.
b) a mortgage broker at the time of application to obtain a favorable rate.
c) the seller as part of the closing costs of a loan.
d) a lender to protect against foreclosure.

A

a) a lender to decrease the interest rate on a mortgage loan.

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4
Q

A loan officer suspects the Social Security number in an FHA application is incorrect. What must he/she do?

a. Contact the Social Security administration to verify it
b. Proceed with the loan and HUD will verify it
c. Give the borrower five days to bring in the verification
d. Proceed with the loan, because FHA will verify the Social Security number

A

a.Contact the Social Security administration to verify it

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5
Q

Alonzo is obtaining an USDA loan; he knows that he will have to pay an initial guarantee fee. He is purchasing the home for $150,000 and putting only the minimum down. What is the guarantee fee?

a. $1,455.00
b. $15,000.00
c. $1,447.50
d. $1,500.00

A

d.$1,500.00

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6
Q

ALTA is the acronym for:

a. American Land Title Association.
b. Afro-American Loan Truth Act.
c. All-Inclusive Loan and Title Association.
d. American Land Truth Act.

A

a.American Land Title Association.

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7
Q

An active duty service person, or a veteran obtaining his/her second VA loan would pay what amount for the VA funding fee if they have less than a 5% down payment (2019)?

a. 2.15%
b. 2.25%
c. 3.60%
d. 2.40%

A

c.3.60%

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8
Q

An MLO has a borrower come in who is a veteran, the borrower is looking to obtain a VA loan. The borrower has never received a VA loan before and intends to put 0% down, what would be this borrower’s funding fee?

a) 2.3%
b) 1.65%
c) 1.4%
d) 3.6%

A

a) 2.3%

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9
Q

An MLO is working with a borrower who wants to purchase a home using an FHA loan, what is the maximum LTV allowed on an FHA loan?

a) 100%
b) 96.5%
c) 95%
d) 97%

A

b) 96.5%

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10
Q

COFI is the acronym for:

a. Confluence of Funds Index
b. Coefficient of Funding Index
c. Calculation of Foreign Indexes
d. Cost of Funds Index

A

d.Cost of Funds Index

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11
Q

Credit scores are determined by all the following EXCEPT:

a) Items from public records like bankruptcies or foreclosure
b) A borrower’s income
c) Payment history
d) Credit mix

A

b) A borrower’s income

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12
Q

CRV is the acronym for:

a. Certificate of Residential Value.
b. County Residential Valuation.
c. Community Redevelopment Value.
d. Certificate of Reasonable Value.

A

d.Certificate of Reasonable Value.

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13
Q

FDIC is the acronym for:

a. Federal Deposit Insurance Corporation.
b. First Deposit and Insurance Corporation.
c. Fair Distribution of Insurance Commissions.
d. Federal Development of Institutional Corporations.

A

a.Federal Deposit Insurance Corporation.

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14
Q

FHA (Federal Housing Administration) loans fall under the control and guidelines of:

a. FNMA/FHLMC.
b. PAR/BPS.
c. HUD.
d. RESPA/TILA.

A

c.HUD.

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15
Q

FHA loan limits change from time to time, and are based on the:

a. Average selling price of homes in a county
b. FHA median house prices
c. Average income level of the county
d. FNMA maximums minus 20%

A

b.FHA median house prices

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16
Q

FHA loans can be obtained by:

a. Only first time home buyers
b. Anyone
c. Low-income wage earners only
d. Middle-income wage earners as defined by law

A

b.Anyone

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17
Q

HELOC is the acronym for:

a) Housing Equity Loan Corporation.
b) Housing Equity Loans Of Commission.
c) House and Environmental Landscaping of Compensation Act.
d) Home Equity Line of Credit

A

d) Home Equity Line of Credit

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18
Q

How much is charged for the up front mortgage insurance on an FHA loan (2012)?

a. 1.50%
b. 1.75%
c. 1.25%
d. 2.25%

A

b.1.75%

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19
Q

If a borrower comes in and is looking to do an FHA purchase. The MLO pulls their credit and discovers a Chapter 7 bankruptcy. How long in the past does that bankruptcy have to be discharged before the borrower can qualify for an FHA loan?

a) 7yrs from the discharge date
b) 5yrs from the discharge date
c) 2yrs from the discharge date
d) 4yrs from the discharge date

A

c) 2yrs from the discharge date

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20
Q

If an applicant works 40 hours a week and is paid $14.26 per hour, what is the applicant’s average monthly income?

a) $2,487.68
b) $2,281.60
c) $2,471.73
d) $2,444.57

A

c) $2,471.73

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21
Q

In an effort to become an informed borrower, each borrower should receive from the lender all of the following EXCEPT:

a) Real Estate Purchase Contract.
b) Loan Estimate
c) HomeLoan Toolkit
d) 1003

A

a) Real Estate Purchase Contract.

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22
Q

Interest rates for an FHA loan are set by:

a. Federal Reserve Board
b. Federal Reserve Bank
c. HUD
d. Market forces and/or negotiation between lender and borrower

A

d.Market forces and/or negotiation between lender and borrower

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23
Q

New VA loans are available to:

a. Family members of veterans
b. Friends of veterans
c. Any qualified buyer
d. Eligible veterans

A

d.Eligible veterans

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24
Q

On an FHA loan, the discount points can be paid:

a. Only by adding them to the loan
b. Only by the borrower
c. Either by the borrower and/or the seller
d. Only by the seller

A

c.Either by the borrower and/or the seller

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25
Q

On an FHA loan, which form of a gift is NOT allowed?

a. Gift from an aunt and uncle
b. Gift from a grandmother
c. The seller gifts the down payment
d. An employer gift which does not have to be repaid

A

c.The seller gifts the down payment

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26
Q

On which two documents would a Pre-Payment Penalty be disclosed?

a) Closing Disclosure and Truth In Lending Disclosure
b) Note and Truth In Lending Disclosure
c) Deed of Trust and Intent to Proceed
d) Closing Disclosure and Loan Estimate

A

d) Closing Disclosure and Loan Estimate

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27
Q

PITI is the acronym for:

a) Principal, Interest, Taxes, Insurance.
b) Primary Integrated Taxes and Investment.
c) Price, Investment, Taxes, Insurance.
d) Property Interest and Tax Installment.

A

a) Principal, Interest, Taxes, Insurance.

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28
Q

PUD is the acronym for:

a) Planned Unit Development.
b) Primary Utility Disclosure.

c) Preliminary Uniform Disclosure.
d) Property Unit Development

A

a) Planned Unit Development.

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29
Q

The 1003 is which of the following?

a) The Underwriting Transmittal
b) The Uniform Residential Loan Application
c) The Uniform Residential Appraisal Report
d) The APR disclosure

A

b) The Uniform Residential Loan Application

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30
Q

The APR includes all fees that are required in order to get the loan. Not included is:

a) title Insurance.
b) daily Interest charge.
c) MIP or PMI.
d) origination fee.

A

a) title Insurance.

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31
Q

The Homeowners Protection Act states that when a loan-to-value falls below 78% PMI is to be:

a) Extended
b) Refunded
c) Terminated
d) Renewed

A

c) Terminated

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32
Q

The term “20 basis points” expressed as a percentage is:

a) 0.02%
b) 0.20%
c) 2.00%
d) 20.00%

A

b) 0.20%

33
Q

There are two main components of determining the interest rate on an ARM, which part of an ARM is set at the beginning and never changes?

a) Index
b) Margin
c) Fully-indexed rate
d) Interest rate

A

b) Margin

34
Q

USDA loans include a guarantee fee, what is the initial guarantee fee?

a) 1%
b) 2%
c) .35%
d) .41%

A

a) 1%

35
Q

What are the qualifying ratios on an FHA loan when manually underwritten?

a. 28/36
b. 33/38
c. 29/41
d. 31/43

A

d.31/43

36
Q

What is a mortgage or deed of trust?

a. The document that passes title from the borrower to the lender on the property being collateralized
b. It is the contract that establishes the conditions for the loan and the repayment of money
c. The document that creates a lien against the property
d. The instrument that makes the lender a partial owner of the collateralized property

A

c.The document that creates a lien against the property

37
Q

What is an unacceptable source of funds for down payment on a Fannie/Freddie Loan?

a. A bonus from an employer that does not have to be repaid
b. A gift from the employer
c. The selling of an asset
d. Unverifiable cash on hand

A

d.Unverifiable cash on hand

38
Q

What is an unacceptable source of gift funds on an FHA loan?

a) From seller to borrower
b) From uncle to niece
c) From grandparent to grandchild
d) From an employer

A

a) From seller to borrower

39
Q

What is the name of Fannie Mae’s automated underwriting system?

a) Encompass
b) POINT by Calyx
c) Desktop Underwriter
d) Product Advisor

A

c) Desktop Underwriter

40
Q

What is the name of Freddie Mac’s automated underwriting system?

a) Desktop Underwriter
b) Desktop Originator
c) FHLMC Loan Underwriter
d) Product Advisor

A

d) Product Advisor

41
Q

What loan requires an upfront mortgage insurance fee?

a. Subprime
b. FHA
c. VA
d. Conventional

A

b.FHA

42
Q

When selling a home which has an FHA loan, when can the FHA loan be assumed?

a. When the loan documents say the FHA loan is assumable
b. FHA loans cannot be assumed
c. When the seller indemnifies the lender against default
d. When the buyer signs a release document

A

a.When the loan documents say the FHA loan is assumable

43
Q

Which disclosure is due within three business days of application?

a. CD
b. Fair Housing Disclosure
c. Servicing Disclosure
d. ECOA Notice

A

c.Servicing Disclosure

44
Q

Which is not a credit reporting agency?

a) Equifax
b) TransUnion
c) Experian
d) MGIC

A

d) MGIC

45
Q

Which is not included in debt-to-income ratio?

a) Monthly utility bills
b) Car lease payments
c) HOA dues not included in the house payment
d) Credit card debt

A

a) Monthly utility bills

46
Q

Which of the following is not an acceptable source for the borrower’s down payment on a Fannie Mae loan?

a) Funds the borrowers have saved in their checking account
b) Funds from an inheritance
c) A secured loan from a car that the borrowers own that’s payment is calculated into the borrower’s debt-to-income
d) A cash advance from a credit card if it doesn’t show on the credit report

A

d) A cash advance from a credit card if it doesn’t show on the credit report

47
Q

Which of the following is the most correct concerning a mortgage or deed of trust?

a) It must be signed by the borrower and the lender in order to make it legally enforceable.
b) It encumbers the borrower’s title to the real estate.
c) It conveys title to the property.
d) It allows the lender to occupy the premises.

A

b) It encumbers the borrower’s title to the real estate.

48
Q

Which of the following statements about a VA loan is true?

a. A veteran must pay off a previous VA loan before he/she can obtain a second VA loan
b. Once a veteran uses his/her loan benefit, the benefit goes away
c. Veterans can use their benefit to get a loan to purchase a personal residence a maximum of two times
d. A veteran can have two or more VA loans in place simultaneously

A

d. A veteran can have two or more VA loans in place simultaneously

49
Q

Which of the following would not be considered an example of an Alt-A loan?

a. A Jumbo Loan
b. A NINA Loan
c. A No Doc Loan
d. A SISA Loan

A

a.A Jumbo Loan

50
Q

Which type of loan application requires that a residual income analysis be performed?

a. VA loan
b. Conventional
c. FHA loan
d. Jumbo

A

a.VA loan

51
Q

Which of the following is not a type of payment option on a Reverse Mortgage?

a. Balloon
b. Tenure
c. Modified Tenure
d. Term

A

a.Balloon

52
Q

When a borrower asks for an FHA loan, which of the following is true concerning the borrower’s credit?

a. The borrower will only get an FHA loan if they have perfect credit
b. The borrower can never have filed bankruptcy in order to obtain an FHA loan
c. The borrower will have to pay off any court-ordered judgements before an FHA loan can be closed
d. The borrower has to have a credit score over 700 to obtain an FHA loan

A

c.The borrower will have to pay off any court-ordered judgements before an FHA loan can be closed

53
Q

A title report includes all the following, except:

a. The county tax information on the property
b. The amount of title insurance the borrower should get
c. The exact location and plat information on the property
d. The chain of title

A

b.The amount of title insurance the borrower should get

54
Q

A borrower wants to get an FHA loan, but they have defaulted on their federal student loan payment. Which of the following represents how the student loan default will be treated?

a. If the judgment was over two years ago, it would have no bearing
b. With a letter of explanation, the borrower may be approved for an FHA loan
c. The borrower cannot obtain an FHA loan because they have defaulted and failed to repay a federal loan
d. As long as the judgment was over one year ago, it has no bearing

A

c.The borrower cannot obtain an FHA loan because they have defaulted and failed to repay a federal loan

55
Q

The APR is the interest rate plus the finance charges computed and expressed as:

a. A dollar amount
b. An annual payment
c. A rate
d. The amount financed

A

c.A rate

56
Q
A
57
Q

An interest rate at PAR would be:

a. The rate quoted in radio advertising to induce clients to call, but which will require discount points
b. The rate charged by banks to their best customers
c. An interest rate with no YSP or discount points
d. The interest rate before any fees

A

c.An interest rate with no YSP or discount points

58
Q

The legal right to use another’s land for a specific limited purpose is called a(n):

a. Easement
b. Restrictive Covenant
c. Encumbrance
d. Encroachment

A

a.Easement

59
Q
A
60
Q

The borrower has the right to rescind the loan within:

a. 3 business days of receiving the right to rescind notice
b. The borrower never has the right to rescind
c. 24 hours of closing
d. 10 days prior to closing

A

a.3 business days of receiving the right to rescind notice

61
Q
A
62
Q

In the mortgage business, what does the word “term” refer to?

a. The time it takes from application to settlement
b. The amount of time your mortgage license has left before expiration
c. The length of time of the loan
d. The various “terms” of the promissory note

A

c.The length of time of the loan

63
Q

SRP stands for:

a. Servicing Release Pricing
b. Service Release Premium
c. Standard Rate Premium
d. Standard Rate Product

A

b.Service Release Premium

64
Q

The amount by which an interest in property exceeds secured claims or liens is the borrower’s:

a. Equity
b. Encumbrance
c. Net Worth
d. Title

A

a.Equity

65
Q

A neighbor building their fence on a borrower’s property would be considered a(n):

a. Encroachment
b. Restrictive covenant
c. Encumbrance
d. Joint Tenancy

A

a.Encroachment

66
Q

With an FHA loan, which of the following is true concerning qualifying ratios?

a. The maximum ratios in any circumstance are 31/43
b. A borrower with a very high credit score may get a loan with 55% debt ratio
c. A borrower with a very low credit score can only borrow to a 31% debt ratio
d. Automated underwriting may approve a borrower with ratios higher than 29/41

A

d.Automated underwriting may approve a borrower with ratios higher than 29/41

67
Q
A
68
Q

What prevents a party from having clear title?

a. Entitlement
b. Escrow
c. Encumbrance
d. Impounds

A

c.Encumbrance

69
Q

A person who brings a borrower and lender together is known as a:

a. Mortgage lender
b. Loan officer
c. Loan intermediary
d. Mortgage broker

A

d.Mortgage broker

70
Q

Which of the following cannot be escrowed?

a. The borrower’s homeowners insurance
b. The borrower’s utility bills
c. The borrower’s real estate taxes
d. The borrower’s HOA fees

A

b.The borrower’s utility bills

71
Q

When a loan is immediately sold onto the secondary market, the responsibility of “funding” belongs to the:

a. Primary lender
b. Borrower
c. Secondary lender
d. Seller

A

a.Primary lender

72
Q

A clause in a deed or a lease to real property that limits what the owner of the land or lease can do with the property is a(n):

a. Encroachment
b. Restrictive Covenant
c. Lien
d. Encumbrance

A

b.Restrictive Covenant

73
Q

Another way to refer to non-conforming loans is:

a. Jumbo
b. VA
c. Investment
d. FHA

A

a.Jumbo

74
Q

How would you compute LTV?

a. Multiply the loan amount by the property value
b. Divide the property value by the loan amount
c. Divide the loan amount by the value of the property
d. Multiply the property value by the loan amount

A

c.Divide the loan amount by the value of the property

75
Q

Which of the following would keep a borrower from getting an FHA loan?

a. No college education
b. Not having a down payment
c. Self-employment
d. Not having a spouse

A

b.Not having a down payment

76
Q

What type of loan never requires monthly mortgage insurance?

a. A 90% LTV conventional loan
b. An 85% LTV jumbo loan
c. A 100% VA loan
d. An 80% FHA loan

A

c.A 100% VA loan

77
Q

Which part of a monthly payment cannot change on a fixed-rate mortgage loan?

a. Interest
b. Hazard Insurance
c. Property Taxes
d. Title Fee

A

a.Interest

78
Q

Two people obtain a loan and buy a home, taking ownership as joint tenants. Which of the following would NOT be true?

a. Both must sign on the loan
b. Each owns 100%
c. Neither could sell without the other’s permission
d. Each owns 50%

A

b.Each owns 100%

79
Q

Under a trust deed and note, what interests do the borrower and lender hold in the property which is used as collateral?

a. Borrower - lien, Lender - legal title
b. Borrower - legal title, Lender - a lien
c. Borrower - equitable title, Lender - legal title
d. Borrower - legal title, Lender - equitable title

A

b.Borrower - legal title, Lender - a lien

NMLS-Exam (5 decks)

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