General Mortgage Knowledge Flashcards
PFC stands for:
Prepaid finance charge
Why are FHA loans beneficial to lenders?
They are 100% insured by the federal government
A loan-level price adjustment (LLPA) is best described as:
GSE charges that result in higher interest rates when consumer eligibility or loan features present a higher risk of default
A(n) _______ is a loan with an interest rate that can adjust monthly and also offers a borrower a number of payment choices, such as 30- or 15- year P&I, interest-only, or a 1% minimum payment, which may result in negative amortization.
Option ARM
WHich of the following is the best example of a conventional loan that exceeds fannie mae and freddie mac’s maximum loan limit?
a nonconforming loan
Balloon payment qualified mortgages:
May be made by small creditors in rural/underserved areas
example of loans that are typically secured by a subordinate lien include all but which of the follow?
A purchase money mortgage
A borrower is a 65 year old retiree with a fixed income and significant equity in his home. Which of the follow would be the best option to supplement his cash flow?
HECM
which of the following would detail the principal and interest payments due on a loan?
The amortization schedule
Which of the following is true of VA loans?
They are assumable
The Federal Housing Administration:
They insure loans
After refinancing, a borrower receives his first mortgage statement and can choose from payments of 1% of the loan amount, interest-only, or 30-year. What type of loan does he have?
Option ARM
Construction loans generally come in two different forms. These are:
construction-to-permanent and standalone construction loans
Fannie mae and freddie mac securitize what type of mortgage loans?
conventional/conforming loans
Which of the following types of loans offers backing from the federal government without using taxpayer dollars?
FHA loans
which of the following is an example of open-ended credit?
HELOC
Which of the following is another term for a junior lien?
Subordinate lien
In order for a small creditor balloon payment mortgage to be a qualified mortgage, the small creditor must hold the loan in its portfolio for:
three years
Community Mortgage Bank (CMB) is a small creditor is a rural area. CMB holds the loans it originates in its portfolio until they are paid in full. CMB tries to limit its transactions to those for qualified mortgages. In a balloon payment QM transaction, the transaction must meet all of the following criteria, except:
The borrower must have a debt-to-income ratio of no more than 43%
A creditor may include a prepayment penalty provision in which of the following mortgages?
A fixed-rate qualified mortgage that is not a higher-priced mortgage
Concerning ARMs, margin is best defined as:
A number expressed as a percentage, that represents a lender’s operating costs and profit margin
If a veteran’s loan goes into foreclosure, the government will:
REimburse the lender up to the guaranteed amount of the loan
