General Questions Flashcards
Name the 2 tax forms used in mortgage lending and what each does
8821 - An actual copy of the tax returns
4506T - A transcript of the tax returns
Name the characteristics of Higher Priced Loans
- 5% over the average prime offer rate
- 5% on a jumbo loan over the average prime offer rate
- 5% on a second mortgage over the average prime offer rate
Passed in 2008
Defined by Housing and Economic Recovery Act of 2008
When was the fair housing act enacted
1968
When was the Civil Rights Act created and what is it about?
1866 and it’s about race
Oldest mortgage law on the books
When was the Community Reinvestment Act created?
1977
What does closing mean?
Signing
What means the same thing as impounds?
Escrow
What is acquisition cost?
Purchase price or appraised value (whichever is less) plus closing costs minus seller credits
What does conventional or conventional loan mean?
A non-government loan
Not FHA, VA, or USDA loan
What is a conforming loan?
Meets FNMA/FHLMC guidelines and is under $417k
What is a traditional loan?
A 30 year fixed rate mortgage
What is a non-traditional mortgage?
Anything other than that 30 year fixed rate mortgage
What is the SAFE act?
Title V of HERA
What is the breakdown of the 20 hours of pre licensing education?
- 3 hours federal law and regulation
- 3 hours ethics
- 2 hours non-traditional mortgage products
What is the SAFE act?
Title V of HERA
What is the breakdown of the 20 hours of pre licensing education?
- 3 hours federal law and regulation
- 3 hours ethics
- 2 hours non-traditional mortgage products
How many hours of annual continuing education are required and what is the breakdown of those hours?
8 hours are required
- 3 hours federal law and regulation
- 2 hours ethics
- 2 hours non traditional mortgage products
T or F The same CE class be used in consecutive years?
False - no credit for the same CE class in consecutive years
When are TRID disclosures not needed?
- Helocs
- Reverse Mortgages
- mobile homes or a dwelling not attached to real property
- loans by people who do five or fewer mortgages a year
When are TRID disclosures not needed?
- Helocs
- Reverse Mortgages
- mobile homes or a dwelling not attached to real property
- loans by people who do five or fewer mortgages a year
What 6 things do you need to have to consider to have taken an application?
P - property address E - estimated value N - name C - credit (ssn) I - income L - loan amount
What is contained in the “Federal Box”?
Annual percentage rate
Finance charge
Amount financed
Total of payments
What is an advertising “trigger term” requiring full disclosure of APR?
- Amount of down payment
- Amount of any payment
- Number of payments
- Period of repayment
- Amount of any finance charge
Basically anytime there is a number in the advertisement except the APR itself
What does section 8 of RESPA do?
- 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”
What does section 9 of RESPA do?
- 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.
What does section 10 of RESPA do?
- 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.
How soon after a loan application is submitted must the TRID disclosures be given?
No later than 3 business days
The good faith estimate (GFE) and the initial Truth-in-Lending disclosure have been combine into a new form. What is that called?
The Loan Estimate
The HUD-1 and final truth in lending disclosure were combined into what new form?
The Closing Disclosure
What are the 2 times you can discriminate based on age?
- Too young to enter into a legal contract - have to be 18.
- Reverse Mortgages - must be 62 or older
Who is in charge of monitoring the Fair Housing Act?
HUD
Under the Fair Housing Act, what are the classes you can’t discriminate against?
F - family status R - race R - religion N - national origin D - disability/handicap S - sex C - color
Under ECOA what are the classes you can’t discriminate against?
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
When can you get a free credit report?
- Information that resulted in adverse action
- victim of identity theft
- inaccurate information resulting from fraud
- public assistance or unemployed
What are the red flag rules and what section of the FACT act do they come from?
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
What is a consumer and When must a consumer be given a privacy notice?
Consumer is first time user or a one time user - Before the personal data is disclosed to a no affiliated third party
Who is a customer and when do they need to get a privacy notice?
Has a continuing relationship with the financial institution and must receive the privacy notice annually.
What are the 4 pieces of information (CIPs - consumer information programs) required to open an account under the US patriot act?
- Name
- Address
- Date of birth
- Ssn or tax id
Cowards have no NADS
How often must the do not call registry be updated?
National List - updated every 3 months
Internal List - updated every 30 days
What is the potential fine for calling someone on the national do not call registry
Up to $16000 per incident
Under established business relationship rules of the do not call registry, for how many months can a call be made after the last transaction?
18 months
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?
3 months
What is the jumbo limit?
Anything over $417000
What is a conventional loan?
Anything that is not a government loan (not fha, va, or usda)
What is a non-conforming loan?
- One that does not meet Fannie Mae/Freddie Mac guidelines
- loan exceeds $417k
- credit quality of buyer does not meet minimum standards
Who wrote the interagency guidelines?
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
What are the elements of an ARM?
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
What are the 2 standard loan applications?
Fannie Mae form 1003
Freddie Mac form 65
How much reserves do you need to have for a loan?
2 months of PITI
How long must funds be seasoned for?
2 months
Self employed need how many years of personal and corporate tax returns?
2 years
What is the housing expense ration?
PITI decide by gross monthly income
What is Total Debt Service Ratio?
Everything you owe decided by your gross monthly income
What are the qualifying ratios for conforming loans?
Housing expense 28%
Total debt service 36%
What are the qualifying ratios for FHA loans?
Housing expense 31%
Total debt service 43%
What is the qualifying ratio of a VA loan?
Total debt service 41%
What is another named name for a USDA loan?
Section 502 loan
What does it mean to hypothecate?
Pledge property as collateral for a loan while maintaining possession
What does redlining mean?
Refusing to make loans on property in a particular neighborhood for discriminatory reasons
What is a blanket loan also known as?
Cross collateralization loan
What is the name of a loan that includes personal property?
Package loan
What is the most stable index used in adjustable rate mortgages?
LIBOR
A loan where the lender gives the borrower obligatory advances is what type of disbursement?
Fixed Disbursement
What is a take out loan used for?
To “take the borrower out” of a construction loan
How much can you “gross up” income and what kind of income can you do this on?
125% and this can be done on non-taxable income
What is the vacancy factor or occupancy factor that is used for rental income
75% - This is what most lenders will allow. Also called giving a haircut
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?
Wraparound mortgage or an unapproved assumption.
The new mortgage “wraps around” the existing mortgage
How many years of self employment income must you have for it to be considered?
2 years
What percentage of a company must you own in order for the income to be considered for a loan?
25%
Who created the NMLS?
Conference of State Bank Supervisors (CSBS) assisted with the American Association or Residential Mortgage Regulators (AARMR)
What is a mortgage broker?
Provides loan origination services but DOES NOT FUND the loan.
What is a mortgage banker?
Provides loan origination AND funds the loan
Who denies or approves individual MLO applications
Each individual state
What is the primary market?
The market in which the borrow is directly given the loan
What is another term for alienation clause?
Due on sale clause
What is an alienation clause?
When a borrower sells a mortgaged property or a partial interest in a mortgage property
What is a Defeasance clause?
When a named event written in the note occurs and the lender is able to call the note due and payable
What are the 3 credit bureaus?
Experian, Equifax and Transunion
Who usually will commit fraud for profit?
An industry insider
Who usually will commit fraud for property?
Done by a borrower to obtain a loan
What are the penalties for a section 8 RESPA violation?
$10,000 fine
1 year in prison
3 times the liability.
Service Released Premium or SRP?
A premium an investor pays the originating company when they buy a loan
How many comparables are required on an appraisal?
At least 3
How soon before closing must an appraisal be given to a borrower?
At least 3 days before closing
What is the most common appraisal approach used in appraising single family housing?
Sales comparison approach
Who are the parties in a land contract?
Vendor - The seller
Vendee - The buyer
For how many years must a lender maintain records indicating disclosures were made under TILA
90 Days
Up to how many days does a consumer have to request a copy of their appraisal after a decision has been made?
90 Days
How much down payment is needed to get a Rural Development Loan
No down payment required
What does familial status refer to?
Individuals in the household who are under the age of 18 including pregnant women.
What is the correct way to ask about a customers marital status?
Are you married, unmarried, or separated?
Do USDA Rural loans require mortgage insurance
no
Who is responsible for tabulating all fees from the lender?
Title Agent
On a 3 day right of rescission, which days are not considered?
Sundays and Federal Holidays
What legislation provides the definition of a traditional mortgage
SAFE Act
After how many months must a reverse mortgage be repaid if the property is not occupied?
12 months
How long must an appraiser look back for to see if flipping activity has taken place?
3 years
After failing the test, how many days must you wait before you can retake the test again?
30 days
How many times can you fail the test before having to wait 6 months to retake the test?
3 times
After failing the test 3 times, how long do you have to wait before you can take the test again?
6 months
