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General Mortgage Knowledge > General Mortgage Knowledge > Flashcards

General Mortgage Knowledge Flashcards

1
Q

Fannie Mae Full Name

A

Federal National Mortgage Association

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2
Q

Freddie Mac Full Name

A

Federal Home Loan Mortgage Corporation

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3
Q

Chartered by the federal government to buy mortgages originated by Savings Associations.

A

Freddie Mac

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4
Q

Fannie Mae Underwriting System

A

Desktop Underwriter

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5
Q

Freddie Mac Underwriting System

A

Loan Prospector

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6
Q

Most conventional mortgages are NOT

A

Assumable, they do not have a “due on sale clause”

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7
Q

On a conventional conforming loan. how much of the down payment is required from the borrower?

A

5%

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8
Q

Late fees are either 4% or 5% of the…

A

Principal and Interest, Not PITI

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9
Q

PITI is…

A

Principal, interest, Taxes, and Hazard, Flood, and Mortgage Insurance

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10
Q

Escrow impounds are collected by

A

The lender as part of the monthly mortgage payment,

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11
Q

Escrow impounds include…

A

Monthly amount for property taxes, hazard insurance and flood insurance, if required.

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12
Q

Fannie Mae requires the non-qualifying spouse to…

A

Sign the mortgage or any other

documentation required to evidence that the spouse is relinquishing all rights to the property.

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13
Q

Fannie Mae requires GUARANTEED FUNDS such as:

A

a cashier’s check from a bank or
reputable financial institution to pay the closing costs; personal checks are not
acceptable.

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14
Q

Fannie Mae emphasizes the borrowers:

A

continuity of stable income vs. stability of

employment.

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15
Q

Fannie Mae requires the borrower to have a:

A

social security number or Individual Taxpayer Identification Number.

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16
Q

Fannie Mae requires the lender to obtain a written…

A

credit report for each borrower

on the loan application who has an individual credit record.

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17
Q

Fannie Mae will not accept a co-borrower’s income for qualifying purposes, unless:

A

The co-borrower also signs the note.

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18
Q

Verification of Bank Balance:

A

Fannie Mae 1006

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19
Q

Verification of Payroll:

A

Fannie Mae 1005

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20
Q

A form that summarizes the applicant’s data and will usually be the top sheet in the loan package when it is sent to the underwriter.

A

Fannie Mae 1008 Tranmittal Summary

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21
Q

Fannie Mae will NOT purchase:

A

Most balloon mortgages

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22
Q

Fannie Mae will purchase mortgages secured by:

A

Residential Properties in urban, suburban or rural areas

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23
Q

Fannie Mae does NOT purchase mortgages on:

A

Agricultural-type properties

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24
Q

Fannie Mae recommends using how many credit score:

A

Two

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25
Q

Alt-A Loans are characterized by:

A

Reduced documentation, high rations, or limited assets

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26
Q

A senior mortgage (first mortgage) has what position?

A

Superior Lien Position

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27
Q

A junior mortgage (subsequent mortgage) has what position?

A

A subordinate lien position

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28
Q

There is an unlimited possible number of:

A

Junior Mortgages and no restriction terms

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29
Q

Two Common Indices

A

US Treasury Securities and LIBOR

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30
Q

A non-amortizing interest-only loan. The balance is due at the end of the term in a balloon payment.

A

A Term Mortgage

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31
Q

In a reverse mortgage:

A

The balance of loan rises as equity shrinks

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32
Q

No income requirements in:

A

Reverse Mortgages

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33
Q

Reverse Mortgages require that the homeowner…

A

Meet with a counselor

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34
Q

A traditional Mortgage is defined as:

A

A 30 year fixed

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35
Q

A Package Mortgage can either be:

A

Amortizing or Non-Amortizing

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36
Q

A loan with an adjustable interest rate, but
with payments that never change; instead, as the rate increases or decreases, the
balance decreases slower of faster as payments are made

A

Variable Balance Mortgage

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37
Q

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 by the borrower.

A

A Wrap Around Mortgage

38
Q

When the seller extends credit to the buyer to finance the purchase
of property.

A

Seller Financing

39
Q

Given by the buyer to a
seller to secure part or all of the money borrowed to purchase the property. A
seller may take part of the purchase price as a mortgage to help the sale.

A

Seller Carry Back / Purchase Money Mortgage

40
Q

This is a fixed rate mortgage set up like a 30-year conventional mortgage loan with payments that increase
regularly. It has a fixed interest rate and increasing payments so that the loan
balance is paid off more quickly.

A

Growing Equity Mortgage

41
Q

Rate adjustment periods

A

Interval at which interest rate changes.

42
Q

Interest rate caps

A

Limits the number % points interest rate can rise or fall

43
Q

An ARM, an introductory rate that is lower than the fully indexed rate at the time of closing is called a…

A

Teaser rate

44
Q

Purchase Money Mortgage

A

When a borrower obtains a mortgage from the seller to purchase a home.

45
Q

Credit documents must be no more than..

A

120 days old on the date the note is signed

46
Q

A first-time home buyer is someone who is purchasing an owner-occupied primary
residence and who has not had an ownership interest in an owner-occupied
property for the past…

A

Three years

47
Q

A guarantor or co-signer is a credit applicant who does not have an ownership interest
in the security property, but who signs the mortgage note and thus..

A

has a joint liability

for the note with the borrower who is the owner of the note.

48
Q

Choice by the lender not to take action even though the borrower is in default of the loan.

A

Forbearance

49
Q

Requires that the loan balance is paid off when the

title is transferred.

A

Due-On-Sale Clause

50
Q

Provision in a mortgage enabling a lender to

demand full repayment if the borrower transfers the loan.

A

Alienation Clause

51
Q

Conforming loans typically do not provide for prepayment penalties. However, if the loan does contain a prepayment penalty,

A

It must be disclosed in the note and must be clearly disclosed on the Loan Estimate and Closing Disclosure.

52
Q

Under federal law, prepayment penalties are now restricted solely to…

A

fixed-rate qualified mortgages and may not be charged after the first three years of the
loan term.

53
Q

Method used to transfer title for a property following full repayment of a loan.

A

Reconveyance Deed

54
Q

The mortgage defeasance clause requires the lender to send a…

A

Satisfaction of Mortgage notice to the borrower within sixty days of paying off the loan

55
Q

Allows the borrower to pay all or part of the loan before it is due without penalty.

A

Prepayment Privilege Clause

56
Q

Permits future additional advances from the same loan.

A

Open End Clayse

57
Q

Partial Release

A

Allows the developer’s lien to be released as the parcel is sold.

58
Q

An individual with power of attorney who is able to sign the contract if one of the parties is not able or competent to sign.

A

ATTORNEY-IN-FACT

59
Q

The party tranferring contactual right to another

A

Assignor

60
Q

The party recieving the contactual rights

A

Assignee

61
Q

AN assignor can keep the…

A

Serving rights along with the mortgage and note to the asignee

62
Q

The owner of a property

A

Grantor

63
Q

Party recieving the title transfer

A

Grantee

64
Q

Written instrument used to convey title or transfer ownership

A

Deed

65
Q

May be placed in the deed and control the use of property

A

Deed Restrictions

66
Q

A structure or portion of a structure that extends over the boundary line of a property onto another parcel

A

Enroachment

67
Q

Loan program relying only on the value of the home and borrowers credit history.

A

No Doc

68
Q

The borrower provided information on his/her income; however, no documentation was required, or verification on the
actual income figures was performed. Assets, employment and other requirements were verified by the lender.

A

Stated Income, Verified Assets (SIVA)

69
Q

No income information was considered; however, assets were verified. Although income was not verified, the lender verified that the borrower was employed.

A

No Income, Verified Assets (NIVA)

70
Q

The borrower provided information about his/her income and assets. However, no documentation was provided, and the lender performed no verification of the information. Although income was not verified, the lender verified that the
borrower was employed.

A

Stated Income, Stated Assets (SISA)

71
Q

No income or assets
information was provided by the borrower, nor verified by the lender. Although
income was not verified, the lender verified that the borrower was employed.

A

No Income, No Assets (NINA)

72
Q

Conforming loans require an underwriting analysis of a borrower’s debt
ratios – ratio of housing debt-to-income and ratio of total debt-to-income. In this type
of nontraditional loan, the borrower’s debt ratios were not considered.

A

No Ratio

73
Q

the borrower may pay off the loan in full in order to avoid a
foreclosure sale of the property.

A

Redemption Period

74
Q

Assumption in which the original borrower is released from all liability.

A

Novation

75
Q

Has priority over all other liens and must be paid off first in the case of foreclosure.

A

Real Estate Tax Liens

76
Q

Loss Mitigation Options Includes

A

Refinancing, Loan Modification, Short Sale, and deed in lieu

77
Q

In evaluating flood insurance terms, the risk of flood potential are identified by

A

Special Flood Hazard Area

78
Q

High Risk Flood ZOnes

A

A and V

79
Q

Moderate Flood Zones

A

B or X

80
Q

Low Risk Flood Zones

A

C or X

81
Q

Flood Insurance must be purchased from..

A

the National Flood Insurance Program

82
Q

Homeowners Insurance requires buyers to…

A

pay the first years insurance in full prior to closing

83
Q

When a lender sells a mortgage loan to another lender, this is called…

A

Assignment of Mortgage

84
Q

Occurs when a lender obtains funds for closing from a line of credit extended by a commercial bank

A

Warehouse funding

85
Q

Allows a broker to originate and close a loan under his

or her name. After closing, the mortgage and note are immediately assigned to that investor.

A

Table Funding

86
Q

When the lender deals directly with the borrower

without any middlemen.

A

Direct Investor

87
Q

Is charged to the borrower at closing to cover the costs of determining whether or not the property is in a flood zone.

A

Flood Certification Fee

88
Q

Work done by the borrower which has value. The work must be listed on
the appraisal to be eligible.

A

Sweat Equity

89
Q

Sweat Equity is not…

A

An acceptable source of funds

90
Q

Who pays for the title policies?

A

Either the seller or the borrower

91
Q

Protects the homeowner (mortgagor) and the lender (mortgagee) against defects that occurred in the past: undisclosed liens, heirs, fraudulent
documents, etc.

A

Title Insurance

General Mortgage Knowledge (8 decks)

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