Flash Cards 1-500
What law deals with credit, APR, & advertising of consumer loans?
TILA/Regulation Z
Which regulation prohibits kickbacks?
RESPA/ Reg Z
Which regulation requires the lender to cancel PMI when the loan reaches 78% LTV?
HPA - Homeowners Protection Act
Which regulation prohibits fee splitting?
Reg X/ RESPA
“X” is the letter used to describe which Regulation?
RESPA
What type of mortgage requires a non-refundable funding fee?
VA loan
What is the provision in a mortgage enabling a lender to demand full repayment if the borrower DEFAULTS on the loan?
Acceleration clause
What is the provision in a mortgage enabling a lender to demand full repayment if the borrower TRANSFERS the loan?
Alienation Clause
What does CFPB stand for?
Consumer Financial Protection Bureau
What two laws created the CFPB?
Dodd-Frank Act and Consumer Finance Protection Act
Which regulation is designed to help meet the Credit Needs of the communities in which it operates?
CRA - Community Reinvestment Act
Under ECOA rules and regulations, how many days does the borrower have to request a copy of an appraisal report if the application was denied?
90 days
Under ECOA rules and regulations, if an application for credit is denied, and if requested by the borrower - how many days does the lender have to provide a copy of an appraisal report?
30 days
If a loan application is approved, under ECOA rules and regulations, when must a copy of the appraisal be provided to the borrower?
3 business days prior to the loan closing
Conforming Loan follow guidelines of which regulators?
Fannie Mae and Freddie Mac
RESPA is the acronym used to describe which Law?
Real Estate Settlements Procedure Act
Which regulation requires the lenders “Be Equal” when extending credit to borrowers?
ECOA/ Reg B
How old must a borrower be to qualify for a Reverse Mortgage?
62+
Which regulation has the primary function of preventing Identity Theft?
FACT Act
Which regulation has Section 114 Rules?
FACT Act
Which regulation requires the creditor to verify the Validity of any change of address received?
Section 114 of the FACT Act
What is the payment method used in a reverse mortgage tat allows the homeowners to receive a monthly check while living in the property?
Tenure Method
What is the fraud scheme where a borrower used someone else’s name to purchase the property, but that person WILL NOT be living in the property?
Straw Borrower
What type of lender “insures” mortgages?
FHA approved lenders
What type of lender “guarantees” mortgages?
VA and USDA approved lenders
What is the entity that loans money to fund purchases in rural areas?
USDA/ Department of Agriculture
What is the value remaining in the property after all liens and debts have been paid?
Equity
A borrower is refinancing his home. How much time does Reg Z give him to change his mind (rescind)?
3 business days
Which regulation established the 3-day right of rescission rule?
Reg Z/ TILA
Redlining is part of which Regulation/Law?
Fair Housing Act
Blockbusting is part of which Regulation/Law?
Fair Housing Act
Steering is part of which regulation/Law?
Fair Housing Act
Trying to convince a homeowner to sell his home by implying that another race/ethnicity is moving in the neighborhood is called?
Blockbusting/panic selling
Trying to convince a homeowner to purchase in a particular neighborhood based on his race, religion or ethnicity is called?
Steering
Refusing to make loans on a property in a certain neighborhood for discriminatory reasons is called?
Redlining
What does HOEPA stand for?
Home Ownership and Equity Protection Act
HOEPA Loans are part of which larger regulation?
Reg Z/TILA
High-cost Loans are part of which larger regulation?
TILA/ Reg Z
High Priced Loans are part of which larger regulation?
Reg Z/ TILA
Section 32 loans are part of which larger regulation?
Reg Z/ TILA
Section 35 loans are part of which larger regulation?
Reg Z/ TILA
MDIA Act is part of which larger regulation?
Reg Z/TILA
Mortgage Disclosure Improvement Act is part of which larger regulation?
Reg Z/ TILA
What is another name for Annual Percentage Rate
Effective Rate
What is another name for Interest Rate?
Nominal Rate or Note Rate
PITI/Gross income =
Housing Expense Ratio (Front End Ratio)
(PITI + monthly debt)/Gross income =
Total Obligation Ratio (Back-End DTI)
How long must TILA disclosures be kept?
2 years
Loan estimate is 3 years
Closing Disclosure is 5 year
What is the maximum amount of time that Negative info can remain on a credit report?
7 years
What is the maximum amount of time that a bankruptcy can remain on a credit report?
10 years
Fastest way to remember the ability to repay?
MICE DOES
MICE Monthly mortgage Income assets Credit Employment
DOES DTI Other debts Expenses(taxes/Insurance) Simultaneous mortgage
Which law/regulation states
that a Bankruptcy can only
remain on your credit for a
MAX of 10 years?
FCRA – Fair Credit Reporting Act
Reg V
Which law/regulation states
that negative information can
only remain on your credit
for a MAX of 7 years?
FCRA - Fair Credit Reporting Act
Which law allows a consumer who has had her credit card used by an identity thief to place a credit freeze on her credit report?
FACT Act
Which law requires
creditors to TRUNCATE
debit and credit card info
on receipts?
FACT Act
Which regulation requires that loan officers must take measures to secure and dispose of (burn and/or shred) a borrower’s sensitive credit information?
FACT Act
Which regulation states that if a borrower is denied credit, he can receive a FREE copy of his credit report?
FCRA – Fair Credit
Reporting Act
REG V
Which regulation states that if
a borrower is unemployed, he
can receive a FREE copy of
his credit report?
FCRA – Fair Credit
Reporting Act – Reg V
Which regulation states that if a borrower is on SSI or Disability, he can receive a FREE copy of his credit report?
FCRA – Fair Credit
Reporting Act – Reg V
Which regulation states that if a borrower has been the victim of fraud, he can receive a FREE copy of his credit report?
FCRA – Fair Credit
Reporting Act – Reg V
Which regulation states that a borrower can receive a FREE copy of his credit report once a year (no reason or requirement necessary)?
FACT Act
During the loan process,
if you ask a borrower if
he is single…which law
are you violating?
ECOA
Which regulation states that the only correct way to ask about a borrower’s martial status is: are you married, unmarried or separated?
ECOA
Who is responsible for
providing the closing
disclosure to the
borrower?
Lender/Creditor
Who is responsible for
providing the closing
disclosure to the Seller?
Settlement Agent/Title Agent
Which regulation
requires the borrower to
receive the Loan
Estimate?
TILA
Which regulation
requires the borrower to
receive the Closing
Disclosure?
TILA
Which regulation requires
the borrower to receive the
Loan Estimate within 3
business days?
RESPA
Which regulation requires
the borrower to receive the
Closing Disclosure within
3 business days?
RESPA
As it relates to the loan
estimate – what is the
definition of a Business
day?
Any day that the Creditor’s office is open for business
According to TILA/REG Z – what is the definition of a Business day?
Any calendar day except for Sundays and Legal Holidays
During the loan process, where do you find HMDA government monitoring information?
Section X of the 1003
What does HMDA stand for?
Home Mortgage Disclosure Act
What appraisal approach is used when appraising property that has been destroyed by a natural disaster?
Cost Approach or replacement cost approach
In the sales comparison
approach, how many
comps are required?
3 comps
What is another name for the Financial Services Modernization Act of 1999?
Graham Leach Bliley Act
How many days does a CREDITOR have to notify a consumer of the status of a credit application (denied, approved, need more info)?
30 days
Which regulation states that a creditor has 30 days to notify a consumer of an
application approval or denial?
ECOA - Reg B
How many hours of Ethics is required to be taught in the 20hr Pre-licensing course?
3 hours
How many hours of Ethics is required to be taught in the 8hr Continuing Education course?
2 hours
How many hours of Federal Law is required to be taught in the 20hr
Pre-licensing course?
3 hours
How many hours of Federal Law is required to be taught in the 8hr Continuing Education course?
3 hours
A mortgage that includes
more than one parcel of
land is called what?
Blanket Mortgage
A mortgage that includes appliances such as a stove or refrigerator is
called what?
Package Mortgage
Which closing document itemizes the final closing cost and items paid in
connection with the loan for the borrower?
Final Closing Disclosure
Which law deals with APR and Advertising of credit terms?
TILA/ Reg Z
What is the official
name for the 3/7/3 rule?
MDIA - Mortgage Disclosure Improvement Act
What regulation requires the lender to perform an escrow analysis?
RESPA - Reg X
Which law states that it is a
violation to discriminate
against a potential borrower
on public assistance?
ECOA
What two classes are protected under Fair Housing Act - but NOT under ECOA?
Disability and Familial Status
What three classes are protected under ECOA but NOT under Fair Housing?
Age, Marital Status, and Public Assistance
What is another name for
a non-conforming loan?
Jumbo Loan
What is another name for a Jumbo loan?
Non-Conforming Loan
The front Ratio for an
FHA loan is 31%… what
is the back ratio?
43%
The front Ratio for a
Conventional loan is
28%… what is the back
ratio?
36%
The Ratio for a VA loan is?
41%
What is another name for
the Bank Secrecy Act?
Anti-Money Laundering Act
What is another name for
the Anti-Money
Laundering Act?
Bank Secrecy Act
Which law requires banks (financial institutions) to keep records of deposits of $10,000 made in cash?
BSA/AML - Anti-Money Laundering
Act/Bank Secrecy Act
Which law requires MLOs to file
suspicion activity that might be a sign of tax evasion, money laundering, or other possible criminal activity exceeding $5,000?
Anti-Money Laundering Act
Bank Secrecy Act (BSA/AML)
If you fail the test, how long must you wait before retaking the exam?
Required 30-day waiting period before retaking a failed test
What does AUS stand for?
Automated Underwriting System
What does SAFE Act stand for?
Secure and Fair Enforcement Act
What does HERA stand for?
Housing and Economic Recovery Act
What does HPA stand for?
Homeowners’ Protection Act
What does GLBA stand for?
Graham Leach Bliley Act
What type of property is
covered under RESPA?
1-4 unit residential property
Which regulation allows lenders to OBTAIN information regarding a borrower’s ethnicity, to help identify possible discriminatory patterns?
HMDA - Regulation C
When can a borrower request cancellation of PMI?
When LTV Reaches 80%
When must the lender automatically cancel PMI?
When the LTV reaches 78%
What is the primary market?
Where borrowers/consumers
obtain mortgage loans
What is the secondary market?
Where lenders buy & sell loans from one another
Name the two
Government Sponsored
Enterprises (GSEs)?
Fannie Mae (FNMA) and Freddie Mac (FHLMC)
Which GSE is the
Federal National
Mortgage Association?
Fannie Mae
Which GSE is the Federal Home Loan
Mortgage Association?
Freddie Mac
TILA applies when credit is payable by written agreement in __ installments?
More than 4 installments
Which AUS system does Fannie Mae use?
Desktop Underwriter (DU)
Which AUS system does Freddie Mac use?
Loan Product Advisor (formerly Loan
Prospector)
How often must National DNC and
internal DNC list be updated?
Every 31 days and records must be
maintained for 24 months
An appraisal is valid for __ months?
An appraisal is valid for 6 months. It
must be re-certified if the appraisal will be 4 months (120 days) old or more at closing.
What is the penalty for
violating the DNC list?
$42,530 per call
Which regulation allows the borrower to sue for 3x’s the amount paid for title insurance?
RESPA (Section 9)
If money was collected, and a borrower rescinds, how long does escrow have to return the funds?
20 days
MLOs seeking to become licensed in other states or who seek to move from a bank to a non-bank lender will be allowed \_\_\_\_ days of transitional (temporary) authority.
These individuals are allowed to originate loans while completing any state-specific requirements for licensure such as education or testing for up to “120” days while they are applying to the state agency for their new license.
What is the only fee that can be collected prior to delivery of the Loan
Estimate?
Credit Report Fee
Once an individual is unlicensed for \_\_\_ years as an MLO, most states require that the individual retake the 20hrs of pre-licensing education in order to have his MLO license reinstated.
3 - 5, depending on the state
What law requires that the
equal housing lender
slogan and/or logo be
placed on all advertising?
Fair Housing Act
How long does a person have to sue for a violation under the Fair Housing Act?
1 year
Once unlicensed for __ years, the individual must retake and pass the
National Exam.
5
What is the site where you can receive a free copy of your credit report, according to the FACT Act?
AnnualCreditReport.com
The lender must provide the
borrower with a list of then
______ HUD approved
counselors.
10
What regulation is designed to protect consumer’s non-public information (NPI)
and how it can and cannot be shared?
GLB Act
Which law requires lenders to verify the date of birth, SS# and ethnicity of a person getting a loan in the United
States?
US Patriot Act
If you fail the test 3 times, what is the waiting period to retest?
180 days (6 months)
Under HMDA, how long must a lender keep the Loan Application Register (LAR)?
3 years
What day does your
license expire each year?
December 31st
What is the renewal period to keep your
license current?
Nov 1 - December 31
What are the two (2) types of mortgages
that require the homeowner meet
with a counselor – to ensure that they
understands how the program works.
Reverse mortgages & Higher-Priced (Section 35/HMLS) mortgages.
Which Act requires companies to give
consumers privacy notices?
Gramm-Leach-Bliley
Which act was implemented to promote
financial stability and to protect consumers from abusive practices?
Dodd Frank Act
What is RESPA Section 6 responsible for?
Mortgage Servicing
What is RESPA Section 8 responsible for?
Kickbacks, Fee Splitting & Unearned fees
What is RESPA Section 9 responsible for?
Title Insurance
What is RESPA Section 10 responsible for?
Escrow Accounts (Impounding/Reserve)
What is the max mortgage term (length) allowed for a mortgage to be classified
as a Qualified Mortgage?
30 years
Until the loan estimate has been delivered, what fee can a MLO charge?
Credit Report
Estimate of charges and terms for settlement services must be available for at least __ business days from the time the Loan Estimate is provided?
10
If a new (revised) Loan Estimate is
required because of a changed circumstance, it must be disclosed
and received by the borrower __ days prior to consummation of the loan?
Four (4) days!
The “initial” loan estimate is due at or “within” 3 days of the application.
A “revised” loan estimate is due “within” 3 days of the notice of change.
But in ALL CASES, it must be delivered four (4) days prior to consummation!
Because the soonest a loan can close (per the MDIA Act) is 7 days! (3 + 4 = 7)
Flood Insurance must be
purchased from the
__.
Flood Insurance must be purchased from the National Flood Insurance Program (NFIP).
The minimum amount of
flood insurance required
for a home in a flood
zone is $_______
$100,000
The max amount of flood
insurance required for a
home in a flood zone is
$_______
$250,000
The loan estimate must
be retained for how
long?
3 years
What does HMDA stand for?
Home Mortgage Disclosure Act
What does NOV stand for?
Notice of Value
What does CRV stand for?
Certificate of Reasonable Value
What does the “R” stand
for in the acronym
NMLSR
Registry
What is a Mortgage Call Report (MCR)?
Quarterly Report required by MLO
Company and Mortgage Brokers
Loan originator organizations must keep
compensation records for how many years?
3 years
Mortgage companies must submit a residential loan origination activity report to the NMLSR every:
three months
Which Act specifically
prohibits blockbusting?
Fair Housing Act
What law protects homeowners from
foreclosure-prevention scams?
Mortgage Assistance
Relief Services
Which law requires financial institutions to keep detailed records of cash transactions exceeding $10,000 (withdrawing, depositing or transporting).
Bank Secrecy Act/ Anti-Money Laundering
What type of federal report is filed when
financial institutions detect suspicious activity?
Suspicious Activity Report
Which law requires businesses to print only the last five card numbers on a
credit card receipt?
FACT Act
What happens if the acceptable variance between the Loan Estimate
and the Closing Disclosure is exceeded?
The excess is refunded to the borrower within 60 days
A higher-priced home loan is one that has:
APR exceeds the average prime rate by at least: - 1.5% for first-lien mortgage - 2.5% for a first lien Jumbo loan, or - 3.5% for a subordinate mortgage lien.
What is the shortest time in which a mortgage purchase loan can close?
7 business days
Which law states that MLOs are required to report any suspicious activity exceeding $5,000 that may be a sign of tax evasion, money laundering, or other possible criminal activity.
BSA/AML Act
Denise reviewed her credit report and discovered a few discrepancies and would like to dispute them – once disputed, how long does the credit reporting agency have to respond to the dispute?
30 days
The Red Flags Rules are also known as:
Section 114 Rules under the FACT Act
What law requires ARM borrowers to receive the Consumer Handbook on
Adjustable Rate Mortgages?
TILA
Which law requires that the “Know Before You Owe” booklet be given
to the borrower?
RESPA
Lenders must maintain an escrow account for higher-priced (Section 35)
mortgages for a minimum of:
5 years
What is the Fannie Mae appraisal report form?
URAR - 1004 Form
What lien has the highest priority and is paid off first when a property is sold?
Property Tax
What document is assigned along with the mortgage?
Promissory note
What document is assigned along with the mortgage?
Promissory note
What term describes the process of a senior mortgage lien-holder voluntarily changing into a junior mortgage lien-holder?
Subordination
What term describes the process of a senior mortgage lien-holder voluntarily changing into a junior mortgage lien-holder?
Subordination
What does Ginnie Mae do?
Guarantees Ginnie-Mae mortgage-backed securities
Which law requires
lenders to train employees
to recognize the Red Flags
of identity theft?
FACT Act
Which law entitles a borrower to a copy of his appraisal report?
ECOA
According to the GLB Act, a person who completes a single transaction with a
creditor is known as a customer or a consumer?
Consumer
The lowest possible
interest rate for an ARM
loan is known as the:
Floor
If an applicant works 30 hours every week and is paid $25.00 per hour, what
is the applicant’s monthly income?
$3250.
$25/hr * 30 hours/wk * 52 weeks/yr / 12 months in a year
What law prohibits discrimination in the sale & lease of property?
Fair Housing Act
The term “20 basis points” expressed as a percentage is:
.2%
The late fee for a conventional loan is:
5% of the P&I
A funding fee is required for a:
VA loan
The mortgagee is the:
Lender
The mortgagee is the:
Lender
Who does Fannie Mae hold responsible for the quality of an appraisal?
Lender
Which law prohibits discrimination by lenders when extending credit?
ECOA
A property sold for $200,000 and was appraised at $180,000. The borrower received a loan for $150,000. What is the loan-to-value?
83.33%
150000/180000
How many days does a lender have to send an adverse action notice?
30
The enforcement of a lien is known as a:
Foreclosure
What minimum percentage of ownership
qualifies an individual as self-employed?
25%
Which law defines the right of rescission?
TILA
How long after the application date must
social security payments continue to be received in order to count as income?
3 years
Which clause in a mortgage allows a lender to increase the interest rate?
Escalation
A VA appraisal is known as a:
Certificate of Reasonable Value (CRV) or Notice of Value (NOV)
Which types of loans are meant for rural areas?
USDA (Section 502) loans
The purchase price of a home is $200,000 and the loan amount is $180,000. The borrower pays 6% interest with 1 discount point and 1 origination point. What is the cost of the points?
$3600.
$180000 X 2%
What is the maximum allowable amount of VA seller concessions?
4%
The late fee for a VA loan is:
4% of the P&I
What is the clause in a mortgage that is also known as a “due on sale” clause?
Alienation
Alimony payments must continue to be received for how long after the application date if they are to be included as income?
3 years
Credit reports are good for how many days after they are pulled for qualifying purposes?
120 days
Which law protects an individual’s confidential information?
Gramm Leach Bliley Act
The Mortgage Servicing Disclosure Statement must be sent to the borrower within how many business days of receiving a loan application?
3 business days
After an escrow account
analysis, money must be
refunded if the over-paid
amount equals or exceeds:
$50
The maximum escrow
cushion that a lender can
require is:
Equal to 2 months (1/6th)
The fluctuating economic indicator used
in an ARM is the…
Index
The Home Mortgage Disclosure Act (HMDA) was implemented by the:
Federal Reserve Board
Tax liens can be kept in the credit report for?
7 years
The range of possible credit score is:
300-850
The Red Flag Rule is concerned with:
Identity theft
Which type of mortgage is funded by the United States Department of
Agriculture?
USDA/502 loans
What type of mortgage requires that the lender provide the borrower with the CHARM booklet?
Adjustable Rate Mortgages
For how many years must a lender retain the Escrow Cancellation Notice?
2 years
For how many years must a lender retain the Partial Payment Policy?
2 years
The mortgagor is the:
Borrower/Payee
Which law (regulation) is designed to create financial stability?
Dodd-Frank Act
Which appraisal approach is BEST for appraising vacant land, new construction or for unusual or special purpose?
Cost Approach
What establishes the lien position?
Date and time of recording
What type of mortgage has a fixed interest rate and increasing payments?
Growing equity mortgage
A graduated payment mortgage:
Has payments that start low and increase over time
If there is no minimum monthly
credit card payment, what
percent of the balance is used in
the calculation of monthly debt?
5%
The Fannie Mae Total Obligations Ratio
(back-end ratio) is:
(PITI +monthly debts)/Gross income = 36%
A borrower is paid
$3,500 bi-weekly – what
would be considered the
gross monthly income?
$7583.33
3500 X 26/12
Company or individual who, for a fee, places loans with lenders,
but does not service such loans is called
a __?
Mortgage Broker
Fannie Mae generally wants how many months of liquid financial reserves after closing?
2 months
The Penalty for Mortgage Fraud is:
$1,000,000 and/or up to 30 years in prison
A co-borrower whose income is used to qualify must sign the:
Mortgage and the note
Which form is used to summarize the
information in the loan package on a FHA loan?
Fannie Mae 1008 –
Transmittal Summary
An appraisal must be re-certified if it is older than:
4 months
The most probable price which a property should bring in an open market
is:
Market Value
The appraisal approach that best applies to vacant land is:
Cost Approach
The appraisal approach
that best applies to a
school is:
Cost Approach
Who handles complaints regarding mortgage loan rejections?
CFPB
What gives someone other than the owner the right to be on the property for a specific purpose?
Easement
What is a clause in the deed that limits the future use of a property?
Deed restriction
The MOST COMMON TYPE of legal description for residential subdivisions
is:
Lot and block
The MOST ACCURATE type
of legal description for
residential subdivisions
is:
Metes and bounds
What type of funding occurs when a lender obtains funds from a line of
credit at a commercial bank?
Warehouse funding
The late fee for FHA and VA loans is:
4%
When a lender sells a mortgage loan to another lender this is called:
Assignment of mortgage
What type of mortgage fraud
scam occurs when a buyer borrows the down payment from seller without the lender’s knowledge?
Silent second
What can result in a $1,000,000 fine and 30 years in prison?
Acts of mortgage fraud
After loan servicing is transferred, the new servicer cannot assess late fees for a period of \_\_\_\_ if the payment is made to the previous lender by mistake:
60 days
Which document is used in place of a mortgage to secure the payment of a promissory note? (This method is used in many states.)
Deed of trust
“APR” means…
Annual percentage rate.
This is the cost of credit
expressed as a
percentage.
A Reconveyance Clause is:
The method used to transfer title for a property following full payment of a loan. Reconveyance is typically used with deed of trust.
A Subordinate lien is:
The same as a second mortgage.
It may also be called a junior lien.
What is a mortgage?
A legal document that connects a promissory note with the collateral
used to secure the note.
A deed is:
A legal instrument that conveys title to real property.
An amortization schedule is:
A table providing the periodic payments needed to pay off a loan by the end of its term. The payments include principal and interest.
Qualified mortgages may not have Back-end DTI exceeding:
43%
What is a note?
A legal document that obligates a borrower to repay a loan. It specifies the terms by which the repayment will occur. It may also be called a promissory note.
VA underwriters use a debt ratio of:
41%
Discount points are paid to?
The lender at closing to reduce the note rate of the loan
Securitization is used to?
Pool similar types of loans to create mortgage-backed securities for sale on the financial market. These securities are used to create a renewable source of funds for lenders.
When does “Dry Settlement” occur?
Parties meet to execute documents, but funds are not disbursed.
When does “Wet Settlement occur”
Parties meet to execute documents and funds are subsequently disbursed.
Name four (4) involuntary liens that could be filed on a property.
Tax liens
Mechanics liens
Judgements
Attachments
What type of lien is a voluntary lien on
property?
A mortgage
What is the definition of “Real Property”?
Land and anything that is permanently affixed to it.
Tom Brown is a nurse at the local hospital. He has worked the night shift for three years and plans to continue this schedule. His base pay is $29.50 per hour with a 5% shift differential. He averages 35 hours per week. What is his qualifying income?
Calculate the shift differential first: $29.50 * 5% = 1.475. So he gets an additional $1.475 per hour. So, $1.475 + $29.50 = $30.975. $30.975 * 35hrs x 52weeks / 12 = $4,697.87
If the purchase price is $300,000 and the loan amount is $250,000 and the
appraisal value is
$275,000…what is the LTV?
90% (250/275)
Suppose the payment is late on a conventional loan and the monthly principal is $1,000, the monthly interest is $500, the monthly taxes are $125 and the monthly insurance is $25.00…what is the amount of the late payment?
$75 = ($1000+$500) X 5%
Suppose the payment is late on a FHA loan and the monthly principal is $1,500, the monthly interest is $150, the monthly taxes are $105, the MIP is $210 and the monthly insurance is $33.00…what is the amount of the late payment?
$66 = ($1500 + 150) X 4%
Monthly PITI payments are $1,400 and the borrower’s gross monthly income is $5,000. His other debts are $200 a month. What is the Housing Expense Ratio?
28% = $1400/$5000
Monthly PITI payments are $1,400 and the borrower’s gross monthly income is $5,000. His other debts are $200 a month. What is the Debt to Income Ratio?
32% = ($1,400 + $200) ÷
$5,000
What type of property is NOT covered by RESPA rules and regulations?
All cash sales, rental units of more then 4, property 25 acres or more &
commercial property.
According to RESPA Section 6 - a servicer must make contact with a
borrower after how many days of a missed payment?
36 days
A lender/servicer must inform the borrower of the available loss mitigation
options after ___ days of missed payments?
45 days
Which regulation allows the borrower to sue for “treble” damages?
RESPA Section 9
What law requires the lender to provide an annual summary of the activity associated with the borrower’s impound account?
RESPA Section 10
The servicing transfer statement must be provided to the borrower ________ prior to transfer.
15 days
What are the six (6) items that make a
“complete” application?
PENCIL Property Address Estimate value Name(s) of borrower(s) Credit/SSN Income Loan amount
The “Know Before You Owe” disclosure must be provided within _________ days of a complete application?
3 days
The “Know Before You Owe” disclosure must be provided for what type of transactions?
Purchase Only
If the application is withdrawn within the first ____days or the lender declines the application within the first _________ days, the lender is NOT required to provide the ____________ to the borrowers.
3; 3; Initial Disclosure
_____ occurs if the lender chooses the
hazard insurance company when the borrower allows the policy to lapse.
Force-placed insurance
Which items have a zero (0) tolerance between the Loan Estimate and the
Closing Disclosure?
Real estate transfer taxes, loan origination fees, interest rates, appraisal and credit report
Which items have a 10% tolerance between the Loan Estimate and the
Closing Disclosure?
Government recording fees, title insurance
On what document would you find
information regarding the “RATE LOCK”?
The Loan Estimate ONLY
What is the penalty for violating RESPA?
$10,000 and/or up to 1-year in jail
Which Regulation is Regulation “Z”?
TILA Truth-In-Lending Act
Which disclosure requires that entities that purchase or acquire mortgage loans to notify the borrower and provide the name, address and telephone number of the new owner within 30 days of acquisition?
Transfer of Ownership Disclosure
The total “interest” being charged on the loan, expressed as a percentage is known as the \_\_\_\_\_\_?
Total Interest Percentage (TIP)
If a borrower was not properly notified of his/her right to rescind, how long can
the rescission period be extended?
Three (3) years
How many copies of the “Right to Rescind” must each borrower receive?
Two
What law requires that the borrower receive the Right to Recession notice?
TILA (Reg Z)
What does APOR stand for?
Average Prime Offer Rate
When is a loan considered a Section 32
(High Cost) Loan?
A loan will be considered a High Cost
(Section 32) loan if its APR exceeds the APOR by more than “6.5%” for a first lien or “8.5%” for a subordination lien, or
when the total points and fees payable in conjunctions with the loan exceed “5%” (8% for loans of $20,000 or less).
When is a loan considered a Section 35
(High priced) Loan?
A loan will be considered a High Priced (Section 35) loan if it’s APR exceeds the APOR by more than 1.5%, 2.5% for jumbo first-lien loans and 3.5% for subordinate liens.
What type of loans “require” an impound
account?
Section 35 High Priced Loans
When is the CHARM booklet required?
When it’s an Adjustable Rate Mortgage
What is the regulation/rule that states that a loan originator cannot receive
Dual Compensation?
Loan Originator compensation rule
Which law states that a loan originator can only be paid a commission by one source, either the borrower or the lender – but not both?
Loan Originator compensation rule
If a lender issues a Qualified Mortgage, it is assumed that the borrower
has satisfied what rule?
The Ability-To-Repay (ATR) rule
What is the max debt-to-income ratio allowed for a mortgage to be considered a qualified mortgage?
43%
What is the max term (length) allowed for a mortgage to be considered
a qualified mortgage?
30 years
What is the max debt-to-income ratio allowed for a mortgage to be considered a qualified mortgage?
43%
What type of mortgage is not allowed to have toxic features such
as: interest only, negative amortization, no income/no asset income qualifications or prepayment penalties?
Qualified Mortgage
What law are you violating if you ask a borrower (on a credit application) if he or she is planning to have any more kids in the future?
ECOA
What law states that married spouses can keep separate credit bureau files,
if requested?
ECOA
Which law states that if a Loan Originator is taking an application “face-to-face” he/she must complete the Government Monitoring Section (Section X) of the 1003 application?
ECOA
Which law states that an adverse action notice (denial) must be in writing?
ECOA
If an applicant receives an adverse
action notice – he can request a
statement of “more specific” reason
within _____ of receipt of the notice?
60 days
ECOA states that creditors cannot
discriminate against the ________ of the borrower’s income, however, they can discriminate against the _____ of the borrower’s income.
Source; Amount
How long must ECOA records be kept?
25 months
How long does a consumer have to sue for a violation under ECOA?
24 months
Which law states that a borrower is entitled to receive a free copy of his
credit score once a year?
None. Credit “score” is never free
How long do “unpaid” taxes appear on a credit report?
Indefinitely
How long does a judgment appear on a
credit report?
7 years
If a consumer has questions regarding
his/her application, who should be contacted?
The lender
If a consumer has questions regarding his/her credit scores, who should be contacted?
The credit reporting agency(ies)
If a consumer is denied credit, what law states that the credit must provide the name, address, and telephone number of the credit reporting agency used to make the decision?
FCRA
What law requires lenders to provide the borrower with the National Credit Score Disclosure, which informs him/her of which credit score was used to approve the mortgage loan?
FACT Act
What law is the loan originator violating if he leaves the clients file on his
desk at the end of the day?
FACT Act
If a consumer’s file is no longer needed, what is the proper way to dispose of it?
Burn/Shred it
What law requires lenders to file monthly reports regarding the ethnicity,
race, and sex of all applicants?
HMDA
An individual who obtains or has obtained a financial product or service from financial institution for person, family or household reasons is referred to as a \_\_\_\_\_\_\_\_\_\_\_\_\_ according to the GLBA Act?
Consumer
An individual/consumer with a
continued relationship with a
financial institution is referred to
as a _______________ according
to the GLBA Act?
Customer
Gaining information under
false pretense is referred to
as ____________ under the
GLBA?
Pretexting
According to the DNC list, telemarketers (including loan originators) must search the national DNC list every \_\_\_\_\_\_\_\_\_\_\_\_\_\_\_ days.
Every 31 days
A SAR (suspicious activity report) must be filed by a mortgage loan originator (MLO) when a person engages in suspicious activity of $\_\_\_\_ or more?
$5000
Which law increases the ability of law enforcement agencies to search
telephone, email, medical and financial records of consumers?
US Patriot Act
Which law is responsible for the establishment of the anti-money
laundering act?
USA Patriot Act
Which law was established to identify
and prevent redlining?
Home Mortgage Disclosure Act (HMDA)
How long must commercial advertising
records be kept?
2 years
What law was created to prohibit money
laundering and financing of terrorist?
USA Patriot Act
What is the name of the
document that indicates
the amount that the
Veteran is entitled to?
CoE
Certificate of Eligibility
What is the maximum flat fee that a lender can charge for a VA loan to
cover lending cost?
Lender may charge a flat fee, up to 1% of the loan amount, to cover the lender’s costs.
An abusive practice in which a loan is refinanced without any tangible net
benefit to the borrower is called?
Loan flipping
FHA imposes restrictions
requiring the borrower not
to resale the property for
the first _________ days.
90 days
FHA requires the lender to investigate the transfer history of property for the ____ before resale, in an attempt to identify potential flipping schemes.
3 years
What type of loans have PMI (Private Mortgage Insurance)?
Conventional loans where the borrower puts less than 20% down
payment
What type of loans have Up Front Mortgage Insurance Premium?
FHA Loans
In a conventional loan, how much of the down payment must come from the borrowers own (personal) funds?
5% of the down payment
What does the Debt Services portion of the monthly payment include?
Debt Services includes the principal and interest portion only (P&I)
What is a HECM?
Home Equity Conversion Mortgage (aka) a FHA reverse mortgage
When is a reverse mortgage due?
Borrowers dies, sells the home, or cease to live in the home for 12 consecutive months
What type of mortgage is it when the borrower is not required to make a payment, but the balance of the loan rises and the equity shrinks?
Reverse Mortgage
What type of mortgage is it when the balance continues to grow, even though the borrower is making the full
payment each month?
Negative amortization
A type of seller financing in which the seller finances enough money to cover the existing loan balance as well as any additional funds needed from the borrower is called a \_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_.
Wraparound mortgage
What type of mortgage is also called a
self-liquidating mortgage and is designed to pay off the entire balance at the end of the loan?
Fully-amortized mortgage
A mortgage that is a
combination of fixed and adjustable. For example, 5/25 – is known as a
____________ mortgage?
Hybrid Mortgage
A written instrument used to convey title or transfer ownership?
Deed
The document that protects the homeowner against defects that occurred in the past, such as undisclosed liens, heirs, fraudulent documents, etc. is called \_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_?
Title Insurance
A \_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_ loan is a short-term cash out loan made on the equity in the applicant’s current property in order to allow them to close on the purchase of a new transaction.
Bridge loan
The area medium income (AMI) cannot exceed __________ in order to be
approved for a USDA/Section 502 loan?
115%
What type of loan program provides 100% financing in rural or farm communities/areas?
USDA
If a credit report doesn’t show the required minimum payment amount, the lender must use __________ for
underwriting purposes?
5% of the outstanding balance
If a borrower rents a room for $1,500 a month, how much would the underwriter count as income?
$1125
75% of 1500
If a borrower receives $1,500 a month child support income, how much would the underwriter count as income?
$1,875.00
$1,500 x 125% = $1,875
If a borrower receives $1,200 a month SSI income, how much would the underwriter count as income?
$1,500.00
$1,200 x 125% = $1,500
Calculate 3 points if the loan amount is $500,000 and the sales price is
$525,000.
$15,000
$500,000 x 3% = $15,000
On a conventional loan where the borrower is making a down payment of $20,000, how much of the down payment must be from the borrower’s own funds?
$1,000
5% of the down payment must be from the borrower’s own funds. $20,000 x 5% = $1,000
An individual that meets the definition of a loan originator, but works for a bank is called a \_\_\_\_\_\_\_\_\_\_\_\_\_\_\_?
registered LO
To be approved as a Loan Originator, a licensee must not have been found guilty of any felony in the past \_\_\_ years.
7 years
The only exception to a person being granted a license if he/she has been found guilty of a felony in the past 7 years (or if the felony deals with money crimes) is if he/she has received a \_\_\_\_\_\_\_\_\_\_\_.
Pardon
What are the three (3) protection options each state must have in place for loan originators?
Minimum net worth, surety bond or reserve account
What is the penalty for
violating the SAFE act?
$28,474 as of January 12, 2018
When must the borrower receive the Initial Escrow Account Disclosure?
Within 45 days after the closing date (if it was not received at closing)
When must the borrower receive Affiliated Business Arrangement
Disclosure (AfBA)?
When the referral is made (immediately) if not then, prior to doc signing.
When must the borrower receive the Privacy Policy Notice?
At first contact, and thereafter, once a year as long as he/she remains a
customer
An applicant is purchasing a home for $100,000 utilizing FHA financing. The home appraises for $98,000. What is the minimum dollar amount that the borrower must contribute as a down payment on this transaction?
$3,430
$98,000 x 3.5%
How long would an
unpaid tax lien remain on
a consumer’s credit
report?
Indefinitely
What is the penalty for knowingly violating the TRID rules?
$1,000,000 per day
What are the two agencies that created the NMLS System?
AARMR and the CSBS American Association of Residential Mortgage Regulators and the Conference of State Bank Supervisors
Mary wants to obtain FHA insured financing on her primary home. Her housing expense will be $800.65.
She also has the following debt: $192.65 (auto payment) and $40 (credit
account). Based on her debt, what would be Mary’s required stable monthly income to qualify for this loan using the total debt-to-income ratio?
$2,403.02.
You MUST know the ratios for FHA to do this problem.
The back-end (total DTI) for FHA is 43%.
$800.65 + 192.65 + $40 = $1,033.30
$1033.30/x = 43%
$1,033.30/43% = x = $2,403.02
For an ARM, an introductory rate that is
lower than the fully indexed rate at the time of closing is called a _________ rate?
Teaser Rate
According to the TRID Rules,
if the Closing Disclosure is mailed to the
borrower, when is it considered received?
Three (3) days after it was mailed/sent
What is the formula for
calculating the CLTV?
(1st mortgage + 2nd mortgage) / the sales price or appraised value (whichever is lower)
What is the monthly PMI on a 90% LTV loan for a property valued at
$500,000 if the monthly PMI factor is .60%?
$225.00
$500,000 x 90% x .60% ÷ 12
Harold is refinancing his home. The property appraised for $260,000, and Harold’s loan amount is $195,000. What is the Loan-to-value for this transaction?
75%
What is the penalty when a loan applicant makes a false statement on the 1003?
May face a five-year jail term
3/1, 5/1, 7/1 and 10/1 ARMs; these are examples of what types of mortgage?
These are adjustable rate mortgages, in which, rate is fixed for three year, five year, seven year and 10 year periods, respectively, but may adjust annually after that.
Also called Hybrid ARMs
What is the official
name for the 1003 form?
Form 1003 is also known as the
Uniform Residential Loan Application
(URLA).
Freddie Mac also uses the same
application form and is known as the
Freddie Mac Form 65.
What is a 1031 Exchange?
A tax deferred exchange of “like”
real estate, used to offset or avoid
capital gain tax.
What is the name of the form that
the IRS uses to retrieve past tax
returns, W-2, and 1099 transcripts
that are on file with the IRS?
4506-T FORM
What documents is a
summary of recorded
transactions, concerning
a particular property?
Abstract of title
What is the clause/condition in a mortgage that gives the lender the right to require immediate repayment of the loan balance if regular mortgage payments are not made or for breach of other conditions of the mortgage?
Acceleration Clause
Interest earned but not yet paid is
called what?
Accrued Interest
What is included in Acquisition Costs?
Purchase price, plus closing
costs, minus seller credits.
What type of mortgage, is a
mortgage in which, the interest rate
is adjusted periodically based on a
pre-selected index?
ARM
An opinion of market
value as of a specific
date is known as what?
Appraisal
The date that the interest rate
changes on an adjustable rate
mortgage (ARM) is known as what?
Adjustment Date
The measurement of the full cost of
a loan, including interest and loan
fees, expressed as a yearly
percentage rate is known as what?
APR
If there is greater than one percent (1%)
ownership interest of a party in both the
business referring out the service and the business receiving the referral, what
document is required?
Affiliated business
arrangement (ABA)
Loan payment, divided into equal periodic payments, calculated to pay off the debt at the end of a fixed period, including accrued interest on the outstanding balance is known as what?
Amortization
What does the Consumer Reporting
Agency (or Bureau) do?
An organization that handles the
preparation of reports used by lenders to determine a potential borrower’s credit history.
The agency gets data for these reports from a credit repository and other sources.
The Big 3: Experian, Equifax and Trans
Union
What is a Contingency?
A condition that must be satisfied,
before a contract is legally binding,
before a sale can close.
Real estate sales contracts often
have a specific date or number of
days, in which, the contingencies
must be removed.
The “When Your Home Is In The Line” disclosure is required by which
regulation?
TILA
What is a Conventional Loan?
A mortgage not insured by FHA or
guaranteed by VA.
When would a Conversion Clause/Option be used?
A provision in an ARM allowing the loan to be converted to a fixed-rate at some point during the term. Usually conversion is allowed at the end of the first adjustment period. The conversion feature may cost extra. Also referred to as a Convertible ARM
What is a Conveyance?
The transfer of a deed or possibly a lease or mortgage.
Covenants, Conditions and Restrictions (CC&Rs) are what type of documents?
A document defining the use,
requirements and restrictions of a
property.
What is a Credit Report?
A report documenting the credit
history and current status of a
borrower’s credit standing.
How long can a registered MLO, who is transferring from a depository institution, in order to become a state-licensed MLO originate mortgages, prior to completing the 20hr course?
120 days (Transitional Authority)
What is a CRV?
Certificate of Reasonable Value.
A property appraisal performed by a VA-approved appraiser that established the limit on the principal of the VA loan.
When should an ARM disclosure be provided to a borrower?
Within three days of the application,
whenever an adjustable-rate
mortgage transaction is contemplated. (TILA)
Who receives the CHARM Handbook?
The Consumer Handbook to
Adjustable-Rate Mortgages (“CHARM”
booklet) must be presented to the consumer within three days of applying for an ARM (adjustable rate mortgage) loan. (TILA)
What is an Assessment?
A local tax, levied against a property,
for a specific purpose, such as: a
sewer or street lights.
The transfer of a mortgage from
one person to another is known as
what?
Assignment
A document showing the financial
situation-assets, liabilities and net
worth of a person at a specific
point in time is known as what?
Balance sheet
What is a Basis point?
A unit of measure: 1/100th of one
percent
For example, the difference
between a 9.0 percent loan and a
9.5 percent loan is 50 basis
points
What is a Bi-weekly
Payment Mortgage?
A plan to reduce the debt every two
weeks (instead of the standard
monthly payment schedule). There
are 26 bi-weekly payments a year
What is a Blanket Mortgage?
A mortgage that covers more than
one parcel of land
Bona fide is also known as what?
“In good faith” - A “bona fide” offer,
is an offer made in good faith.
Who’s considered a Borrower (Mortgagor)?
The borrower/mortgagor is the one
who applies for and receives a loan,
in the form of a mortgage, with the
intention of repaying the loan in full.
What are Caps (Payment)?
Consumer safeguards, which limit
the amount of change to the interest
rate, for an adjustable rate mortgage
Who receives a Certificate of Eligibility?
The document given to qualified
veterans, which entitles them to VA
guaranteed loans for homes, business
and mobile homes.
What is a Certificate of occupancy?
Document, issued by local
government agency, stating that a
property meets the requirements of
health and building codes.
What is a Certificate of Reasonable Value (CRV)?
An appraisal issued by the Veterans
Administration showing the
property’s current market value
What is the Chain of title?
The chronological order of
conveyance of a property, from the
original owner to the present owner
What is a Clear title?
A marketable title, free of clouds and
disputes
COFI/Cost of Funds Index is used to calculate what?
An index used to calculate the rate
of an adjustable-rate mortgage.
The rate adjusts based on a
cost-of-funds index often the 11th
District Cost of Funds.
What is Combined Loan-to-Value (CLTV)?
The ratio of the total mortgage liens
against the subject property, to the
lesser of either the appraised value or
the sales price
Conforming Loans are what type of loans?
A mortgage loan under the maximum
amount of loans that FNMA (Fannie
Mae) and FHLMC (Freddie Mac) are
legally allowed to buy
When are Construction Loans used?
A short-term interim loan to pay for
the construction of buildings or homes
What is the name of the agency who is enforces laws that protect consumers of financial products and services such as mortgages, credit cards and deposit accounts?
CFPB
What is a Rate Lock?
A commitment issued by a lender, to
a borrower guaranteeing a specified
interest rate and lender costs for a
specified period of time
The Real Estate Settlement Procedures Act (RESPA) protects who?
A consumer protection law, which
requires lenders to give borrowers
advance notice of closing
costs/settlement services.
Also known as Regulation X
What is Real Property?
Land and everything, which is
Permanently Affixed to it
Reclamation is the right of which person?
The right of the person, with title to a
property, to recover it from the
debtor in case of a bankruptcy
Reconveyance transfers a property to whom?
The transfer of property back to the
owner when a mortgage is fully
repaid
What is a Recording?
The act of entering documents
concerning title to a property into
public records
Refinance/Refinancing a loan occurs when?
Obtaining a new mortgage loan on a
property, already owned, often to
replace existing loans on the property
Regulation B (ECOA) is also known as what?
The Equal Credit Opportunity Act.
Makes it unlawful for any creditor to discriminate against any applicant, with respect to any aspect of a credit transaction, on the basis of race, color,
religion, national origin, sex, marital status, or age public assistance program
Regulation V (FCRA) regulates what?
The Fair Credit Reporting Act (FCRA) is a United States federal law that regulates the collection, dissemination, and use of consumer information, including consumer credit information.
Regulation Z (TILA) was designed to promote what?
The Truth in Lending Act
Designed to promote the informed use of consumer credit, by requiring disclosures about its terms an cost to standardize the manner
Rescission gives the homeowner the right to do what?
The cancellation of a contract.
What is a Reverse Annuity Mortgage
(RAM)?
A form mortgage, in which, the lender makes periodic payments to the borrower, using the borrower’s equity in the home as collateral for and repayment of the loan.
More commonly called a HECM
(Home Equity Conversion Mortgage)
or simply a Reverse Mortgage.
What is a Reverse Mortgage (HECM)?
HECM or Home Equity Conversion Mortgage
Reverse mortgages unlock the
equity in the home.
Multiple payout options
The Safe Act (2008) was designed for what?
The Secure and Fair Enforcement (S.A.F.E.) Mortgage Licensing Act is
designed to enhance consumer protection and reduce fraud by encouraging states to establish minimum standards for the licensing
and registration of state-licensed mortgage loan originators.
Who issues a Satisfaction of Mortgage?
The document issued by the
mortgage when the mortgage
loan is paid in full.
Also called a “release of
mortgage.”
What is a Second Mortgage?
A mortgage made subsequent to
another mortgage and subordinate to
the first one
Who’s part of the Secondary Mortgage
Market?
The market, into which, primary
mortgage lenders sell the mortgages
they make to obtain funds to originate
more new loans.
This includes investors such as Fannie
Mae, Ginnie Mae and Freddie Mac.
What is a Security?
The property that will be pledged as
collateral for a loan
A Seller Carry Back is what type of agreement?
An agreement in which the owner of
a property provides financing often in
combination with an assumable
mortgage.
Who is a Servicer?
An organization that collects
principal and interest payments from
borrowers and manages the
borrower’s escrow accounts
What is Servicing?
All the steps and operations a lender
performs to keep a loan in good
standing, such as collection of payments, payment of taxes, insurance, property inspections and the like.
What are Settlement/Settlement Costs?
Expenses over and above the price of the property that are incurred by buyers and sellers when transferring ownership of a property.
Also called Closing Costs.
Closing costs normally include an originator fee, property taxes, charges for title insurance and escrow costs, appraisal fees, etc.
Closing costs will vary according to the area country and the lenders used.
Who creates Sweat Equity?
Equity created by a purchaser performing work on a property being
purchased
A Tax Lien is a claim against what?
A claim against a property for unpaid
taxes
What is a Tax Sale?
Public sale of property, by a
government authority, as result of
nonpayment of taxes
A Title shows what?
A document, which gives evidence of
an individual’s ownership of property
A Total Expense Ratio (back-end ratio/total debt ratio) includes what?
Total obligations (PITI + all debt)
divided by the gross monthly income
– expressed as a percentage.
What is the law that requires that
the Annual Percentage be disclosed
to a home buyer, shortly after they
apply for the loan?
TILA
Evaluating a loan application package and making the decision, whether to make a loan to a potential home buyer, based on credit, employment, etc is a process known as?
Underwriting
What federal legislation allows the borrower to challenge the value stated
in an appraisal report?
ECOA – Regulation B
Pretexting is prohibited based on what
law/regulation?
GLB Act
Which regulation states that it is a
violation to discriminate against a
borrower who’s only income is
social security benefits?
ECOA
What is a Deposit/Earnest Money
Deposit?
Cash paid when a formal sales
contract is signed.
The deposit is usually held by a
third party until the sale is
complete.
Depreciation happens when?
When the value of property declines
What are Discount Points?
Prepaid interest assessed at closing by the lender. Each point is equal to 1 percent of the loan amount (e.g. two points on a $100,000 mortgage would cost $2,000).
What was the purpose of
the Dodd-Frank Act?
-To promote financial stability
-To end “too big to fail”
-To protect taxpayers by ending bailouts
-To protect consumers from abusive
practices
Established the Consumer Financial Protection Bureau (CFPB)
Which law requires notification to
the borrower before the servicing of
the loan is transferred to someone
else?
RESPA
What’s an Encumbrance?
A legal right or interest in a
property that affects title and
lessens the property value.
Encumbrances can take the form of
claims, liens, unpaid taxes and so
on.
The value remaining in
property after all liens and
debts are considered is
known as what?
Equity
What type of ARM allows the
borrower to change from an
adjustable rate mortgage to a
fixed rate mortgage?
Convertible ARM
The FACT Act (2003) was an amendment to what earlier law?
Fair and Accurate Credit Transactions Act amended Fair Credit Reporting Act (Reg V).
The act allows consumers to request and obtain a free credit report one every twelve months from each of the three nationwide consumer
credit reporting companies.
The act also contains provisions to help reduce identity theft.
A veteran’s entitlement for a VA loan
is specified in what document?
CoE - Certificate of Eligibility
The APR on a Loan Estimate for a 30-year fixed-rate loan is 6.25% and the APR on the Closing Disclosure is 6.5%. After redisclosure, the borrower must wait _____ to close
the loan.
3 days
According to the GLB Act, an individual who obtains or has obtained a financial product or service from a financial institution is known as a what?
Consumer
If Martin sells his home five months after
purchasing the property, the sale price must exceed Martin’s acquisition cost by more than _____ to require a second appraisal.
20%
A seller who acquired a home within six months of resale and is selling the home for more than 20% of the original acquisition cost must have a second
property appraisal performed on the property.
What is the Federal Reserve?
The central bank of the United
States and major regulatory
agency for many commercial banks.
Commonly referred to as “The Fed”.
Fee simple is what type of ownership?
Absolute ownership of real property
What is a written agreement between
lienholders on a property that
changes the priority of mortgages,
judgments, and other lien?
Subordination agreement
What is a First Mortgage?
The primary lien against a property
A Fixed Rate (Mortgage) has what type of interest rate?
An interest rate is fixed for the term
of the loan
Flood Insurance is what type of insurance?
Hazard insurance
A form of hazard insurance required
by lenders to cover properties in
flood zones
What is FNMA?
The Federal National Mortgage
Association is a secondary
mortgage institution.
FNMA buys VA, FHA and
conventional mortgages from
primary lenders.
Also known as “Fannie Mae.”
What is Forbearance?
Grace period given when a lender
postpones foreclosure, to give the
borrower time to catch up on overdue
payments.
Foreclosure is known as?
Also known as a repossession of
property.
Freddie Mac is a nickname for who?
Federal Home Loan Mortgage Corp.
A Fully Amortized ARM is what type of rate?
An ARM
Ginnie Mae (GNMA) is also known as what?
Government National
Mortgage Association
Government National Mortgage Association (GNMA) is also known as
what?
Also known as “Ginnie Mae.”
Provides sources of funds for
residential mortgages insured or
guaranteed by FHA or VA.
A type of flexible payment mortgage, where the payments increase for a specified period of time and then level off is known as \_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_.
A Graduated Payment
Mortgage (GPM)
Usury is interest charged when?
Interest charged in excess of the legal
rate established by law
What is a Variable Rate Mortgage (VRM)?
Another name for ARM
A document, signed by the borrower’s financial institution (BANK), verifying the status and balance of his/her financial accounts is known as what?
A Verification of Deposit (VOD)
A document, signed by the borrower’s employer, verifying his/her position, salary overtime, bonuses and the likelihood of continued employment is known as what?
A Verification of Employment
VOE
A document, signed by the
borrowers servicer, verifying the
status of the mortgage is called
what?
A Verification of Mortgage (VOM)
A document, signed by the
borrowers landlord, verifying their
rental/lease payment history is
called what?
A Verification of Rent
VOR
A Margin is added to
what to determine the
fully-indexed rate?
Index
What is a Marketable
Title?
A title which is free and clear of
liens, clouds or other defects, which
would prevent the sale of the
property.
A Mechanic’s Lien is
used when?
A mechanic’s lien is a security interest
in the title to property for the benefit of
those who have supplied labor or
materials that improve the property.
The lien exists for both real property
and personal property.
It is considered a cloud on title.
MIP (Mortgage
Insurance Premium) is
purchased by whom?
Insurance from FHA, to the lender,
against incurring a loss, if the
borrower’s were to default.
Insurance purchased by borrower to
insure against default on a FHA
loans.
MIP protects the LENDER
A Monthly Housing
Expense includes what?
Total monthly expense of principal, interest, taxes, hazard insurance an mortgage insurance (PITI).
It also includes any HOA (Home
Owners Association) dues. (PITIA)
What is a Mortgage?
A legal document, which pledges a
property to the lender as security for
payment of a debt
The Mortgage Disclosure
Improvement Act (MDIA)
2008 amended what?
TILA
Requires disclosures (LE) to be sent to the borrower within three (3) business days after receiving borrowers application.
The loan may not close until after the
seventh (7th) business day after disclosures have been delivered or mailed to the borrower.
Who is a Mortgagee?
The lender in a mortgage loan
transaction
What is Private Mortgage Insurance?
Money paid to insure the mortgage
when the down payment is less than
20 percent
Who is a Mortgagor?
The borrower or homeowner.
What is Negative Amortization?
When your monthly payments are not
large enough to pay all the interest due on the loan.
This unpaid interest is added to the
unpaid balance of the loan.
If the borrower does not increase
payments, the home buyer will end up
owing more than the original amount of
the loan.
A Non-Conforming Loan cannot be sold to who?
Fannie Mae and Freddie Mac
A Notice of Default (NOD) is given to who?
Written notice to a borrower, that a
default has occurred and that legal
action may be taken.
What is the Office of
Comptroller Currency?
The federal financial regulatory
body, which oversees the nation’s
federally chartered banks and savings
institutions.
