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Mortgage Licensing > General Questions > Flashcards

General Questions Flashcards

1
Q

Name the 2 tax forms used in mortgage lending and what each does

A

8821 - An actual copy of the tax returns

4506T - A transcript of the tax returns

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2
Q

Name the characteristics of Higher Priced Loans

A
  1. 5% over the average prime offer rate
  2. 5% on a jumbo loan over the average prime offer rate
  3. 5% on a second mortgage over the average prime offer rate

Passed in 2008

Defined by Housing and Economic Recovery Act of 2008

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3
Q

When was the fair housing act enacted

A

1968

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4
Q

When was the Civil Rights Act created and what is it about?

A

1866 and it’s about race

Oldest mortgage law on the books

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5
Q

When was the Community Reinvestment Act created?

A

1977

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6
Q

What does closing mean?

A

Signing

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7
Q

What means the same thing as impounds?

A

Escrow

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8
Q

What is acquisition cost?

A

Purchase price or appraised value (whichever is less) plus closing costs minus seller credits

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9
Q

What does conventional or conventional loan mean?

A

A non-government loan

Not FHA, VA, or USDA loan

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10
Q

What is a conforming loan?

A

Meets FNMA/FHLMC guidelines and is under $417k

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11
Q

What is a traditional loan?

A

A 30 year fixed rate mortgage

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12
Q

What is a non-traditional mortgage?

A

Anything other than that 30 year fixed rate mortgage

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13
Q

What is the SAFE act?

A

Title V of HERA

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14
Q

What is the breakdown of the 20 hours of pre licensing education?

A
  • 3 hours federal law and regulation
  • 3 hours ethics
  • 2 hours non-traditional mortgage products
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15
Q

What is the SAFE act?

A

Title V of HERA

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16
Q

What is the breakdown of the 20 hours of pre licensing education?

A
  • 3 hours federal law and regulation
  • 3 hours ethics
  • 2 hours non-traditional mortgage products
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17
Q

How many hours of annual continuing education are required and what is the breakdown of those hours?

A

8 hours are required

  • 3 hours federal law and regulation
  • 2 hours ethics
  • 2 hours non traditional mortgage products
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18
Q 
T or F
The same CE class be used in consecutive years?
A

False - no credit for the same CE class in consecutive years

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19
Q

When are TRID disclosures not needed?

A
  • Helocs
  • Reverse Mortgages
  • mobile homes or a dwelling not attached to real property
  • loans by people who do five or fewer mortgages a year
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20
Q

When are TRID disclosures not needed?

A
  • Helocs
  • Reverse Mortgages
  • mobile homes or a dwelling not attached to real property
  • loans by people who do five or fewer mortgages a year
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21
Q

What 6 things do you need to have to consider to have taken an application?

A 
P - property address
E - estimated value
N - name
C - credit (ssn)
I - income
L - loan amount
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22
Q

What is contained in the “Federal Box”?

A

Annual percentage rate
Finance charge
Amount financed
Total of payments

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23
Q

What is an advertising “trigger term” requiring full disclosure of APR?

A
  1. Amount of down payment
  2. Amount of any payment
  3. Number of payments
  4. Period of repayment
  5. Amount of any finance charge

Basically anytime there is a number in the advertisement except the APR itself

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24
Q

What does section 8 of RESPA do?

A
  • Prohibits kick backs for referrals
  • No fee splitting and receiving unearned fees
  • Cannot require specific use of settlement service providers

“I ate something and it kicked me back in the stomach”

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25
Q

What does section 9 of RESPA do?

A
  • Prohibits seller from requiring the home buyer to use a particular title insurance company either directly or indirectly as a condition of sale.
  • allows buyers to sue for an amount equal to three times all charges made for title insurance.
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26
Q

What does section 10 of RESPA do?

A
  • Escrow limited to no more than 1/12 of annual distribution.
  • allows a cushion of 1/6 annual disbursement.
  • escrow account requires annual analysis
    • inform customer of any shortage
    • return excess over $50 to consumer
  • does not require lenders to have escrow accounts.
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27
Q

How soon after a loan application is submitted must the TRID disclosures be given?

A

No later than 3 business days

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28
Q

The good faith estimate (GFE) and the initial Truth-in-Lending disclosure have been combine into a new form. What is that called?

A

The Loan Estimate

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29
Q

The HUD-1 and final truth in lending disclosure were combined into what new form?

A

The Closing Disclosure

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30
Q

What are the 2 times you can discriminate based on age?

A
  1. Too young to enter into a legal contract - have to be 18.
  2. Reverse Mortgages - must be 62 or older
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31
Q

Who is in charge of monitoring the Fair Housing Act?

A

HUD

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32
Q

Under the Fair Housing Act, what are the classes you can’t discriminate against?

A 
F - family status
R - race
R - religion
N - national origin
D - disability/handicap
S - sex
C - color
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33
Q

Under ECOA what are the classes you can’t discriminate against?

A

Sam Necrrr
S - sex
A - age
M - marital status

N - national origin
E - exercising rights to ccpa
C - color
R - race
R - religion
R - rights to receive public assistance
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34
Q

When can you get a free credit report?

A
  • Information that resulted in adverse action
  • victim of identity theft
  • inaccurate information resulting from fraud
  • public assistance or unemployed
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35
Q

What are the red flag rules and what section of the FACT act do they come from?

A

Section 114 (the 4 looks like a flag - red flag rules)

  • financial institutions and creditors to implement written identity theft protection program
  • card issuers to assess the validly of change of address request
  • users of credit reports to reasonably verify the identity of subject in case of address discrepancy
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36
Q

What is a consumer and When must a consumer be given a privacy notice?

A

Consumer is first time user or a one time user - Before the personal data is disclosed to a no affiliated third party

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37
Q

Who is a customer and when do they need to get a privacy notice?

A

Has a continuing relationship with the financial institution and must receive the privacy notice annually.

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38
Q

What are the 4 pieces of information (CIPs - consumer information programs) required to open an account under the US patriot act?

A
  1. Name
  2. Address
  3. Date of birth
  4. Ssn or tax id

Cowards have no NADS

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39
Q

How often must the do not call registry be updated?

A

National List - updated every 3 months

Internal List - updated every 30 days

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40
Q

What is the potential fine for calling someone on the national do not call registry

A

Up to $16000 per incident

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41
Q

Under established business relationship rules of the do not call registry, for how many months can a call be made after the last transaction?

A

18 months

42
Q

Under established business relationship rules of the do not call registry, for how many months can a call be made after the last inquiry or application?

A

3 months

43
Q

What is the jumbo limit?

A

Anything over $417000

44
Q

What is a conventional loan?

A

Anything that is not a government loan (not fha, va, or usda)

45
Q

What is a non-conforming loan?

A
  • One that does not meet Fannie Mae/Freddie Mac guidelines
  • loan exceeds $417k
  • credit quality of buyer does not meet minimum standards
46
Q

Who wrote the interagency guidelines?

A

B -board of governors of the federal reserve system (board)
F - federal deposit insurance corporation (fdic)
O - office of the comptroller of currency (occ)
O - office of thrift supervision (ots)
N - national credit union administration (ncua)

BFOONs

47
Q

What are the elements of an ARM?

A

Index - reliable indicator of the cost of money

Margin - added to the index to find the current interest rate charged. Sometimes called the spread.

Rate Adjustment Period - interval at which interest rate changes

Mortgage Payment Adjustment Period - interval at which mortgage payment changes

Interest Rate Caps - limits the number of percentage points interest rate can rise or fall

Mortgage Payment Caps - protects from large payment increases

Negative Amortization Cap - requires loan payments to be recast when the cap is reached

48
Q

What are the 2 standard loan applications?

A

Fannie Mae form 1003

Freddie Mac form 65

49
Q

How much reserves do you need to have for a loan?

A

2 months of PITI

50
Q

How long must funds be seasoned for?

A

2 months

51
Q

Self employed need how many years of personal and corporate tax returns?

A

2 years

52
Q

What is the housing expense ration?

A

PITI decide by gross monthly income

53
Q

What is Total Debt Service Ratio?

A

Everything you owe decided by your gross monthly income

54
Q

What are the qualifying ratios for conforming loans?

A

Housing expense 28%

Total debt service 36%

55
Q

What are the qualifying ratios for FHA loans?

A

Housing expense 31%

Total debt service 43%

56
Q

What is the qualifying ratio of a VA loan?

A

Total debt service 41%

57
Q

What is another named name for a USDA loan?

A

Section 502 loan

58
Q

What does it mean to hypothecate?

A

Pledge property as collateral for a loan while maintaining possession

59
Q

What does redlining mean?

A

Refusing to make loans on property in a particular neighborhood for discriminatory reasons

60
Q

What is a blanket loan also known as?

A

Cross collateralization loan

61
Q

What is the name of a loan that includes personal property?

A

Package loan

62
Q

What is the most stable index used in adjustable rate mortgages?

A

LIBOR

63
Q

A loan where the lender gives the borrower obligatory advances is what type of disbursement?

A

Fixed Disbursement

64
Q

What is a take out loan used for?

A

To “take the borrower out” of a construction loan

65
Q

How much can you “gross up” income and what kind of income can you do this on?

A

125% and this can be done on non-taxable income

66
Q

What is the vacancy factor or occupancy factor that is used for rental income

A

75% - This is what most lenders will allow. Also called giving a haircut

67
Q

What type of mortgage is it called when a Seller keeps their existing mortgage in place but in the meanwhile gives a buyer a new loan but a deed is not recorded?

A

Wraparound mortgage or an unapproved assumption.

The new mortgage “wraps around” the existing mortgage

68
Q

How many years of self employment income must you have for it to be considered?

A

2 years

69
Q

What percentage of a company must you own in order for the income to be considered for a loan?

A

25%

70
Q

Who created the NMLS?

A

Conference of State Bank Supervisors (CSBS) assisted with the American Association or Residential Mortgage Regulators (AARMR)

71
Q

What is a mortgage broker?

A

Provides loan origination services but DOES NOT FUND the loan.

72
Q

What is a mortgage banker?

A

Provides loan origination AND funds the loan

73
Q

Who denies or approves individual MLO applications

A

Each individual state

74
Q

What is the primary market?

A

The market in which the borrow is directly given the loan

75
Q

What is another term for alienation clause?

A

Due on sale clause

76
Q

What is an alienation clause?

A

When a borrower sells a mortgaged property or a partial interest in a mortgage property

77
Q

What is a Defeasance clause?

A

When a named event written in the note occurs and the lender is able to call the note due and payable

78
Q

What are the 3 credit bureaus?

A

Experian, Equifax and Transunion

79
Q

Who usually will commit fraud for profit?

A

An industry insider

80
Q

Who usually will commit fraud for property?

A

Done by a borrower to obtain a loan

81
Q

What are the penalties for a section 8 RESPA violation?

A

$10,000 fine

1 year in prison

3 times the liability.

82
Q

Service Released Premium or SRP?

A

A premium an investor pays the originating company when they buy a loan

83
Q

How many comparables are required on an appraisal?

A

At least 3

84
Q

How soon before closing must an appraisal be given to a borrower?

A

At least 3 days before closing

85
Q

What is the most common appraisal approach used in appraising single family housing?

A

Sales comparison approach

86
Q

Who are the parties in a land contract?

A

Vendor - The seller

Vendee - The buyer

87
Q

For how many years must a lender maintain records indicating disclosures were made under TILA

A

90 Days

88
Q

Up to how many days does a consumer have to request a copy of their appraisal after a decision has been made?

A

90 Days

89
Q

How much down payment is needed to get a Rural Development Loan

A

No down payment required

90
Q

What does familial status refer to?

A

Individuals in the household who are under the age of 18 including pregnant women.

91
Q

What is the correct way to ask about a customers marital status?

A

Are you married, unmarried, or separated?

92
Q

Do USDA Rural loans require mortgage insurance

A

no

93
Q

Who is responsible for tabulating all fees from the lender?

A

Title Agent

94
Q

On a 3 day right of rescission, which days are not considered?

A

Sundays and Federal Holidays

95
Q

What legislation provides the definition of a traditional mortgage

A

SAFE Act

96
Q

After how many months must a reverse mortgage be repaid if the property is not occupied?

A

12 months

97
Q

How long must an appraiser look back for to see if flipping activity has taken place?

A

3 years

98
Q

After failing the test, how many days must you wait before you can retake the test again?

A

30 days

99
Q

How many times can you fail the test before having to wait 6 months to retake the test?

A

3 times

100
Q

After failing the test 3 times, how long do you have to wait before you can take the test again?

A

6 months

Mortgage Licensing (4 decks)

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