Loan Programs Flashcards
Qualified and Non-Qualified Mortgage Programs
Question
What is the maximum prepayment penalty which may be charged in the first year of the loan if the loan is considered a qualified mortgage?
A. Zero
B. 2% of the outstanding balance
C. 3% of the outstanding balance
D. 1% of the outstanding balance
The answer is 2% of the outstanding balance. If a qualified mortgage provides for a prepayment penalty, the penalty may not apply after the three-year period following consummation and must not exceed statutory percentages of the amount of the outstanding loan balance prepaid. If the loan is prepaid in the first two years, the prepayment penalty may not exceed 2% of the amount prepaid.
Qualified and Non-Qualified Mortgage Programs
Question
A jumbo loan:
A. Is for subprime borrowers only
B. Is another name for a VA loan
C. Exceeds conforming loan limits
D. Is illegal
Practice Confidence
The answer is exceeds conforming loan limits. Conventional loans that meet the maximum loan limit eligibility guidelines for purchase by Fannie Mae or Freddie Mac are considered conforming loans. Loans that exceed this loan limit are called jumbo loans, or nonconforming loans.
Qualified and Non-Qualified Mortgage Programs
Question
According to the Statement on Subprime Mortgage Lending, which of the following would not be a characteristic of a subprime borrower?
A. A foreclosure in the past 24 months
B. A credit score of 645
C. Bankruptcy within the last three years
D. Two 60-day delinquencies in the last year
The answer is a credit score of 645. According to the Statement on Subprime Mortgage Lending, a subprime borrower may have one or more of the following characteristics: a bankruptcy in the last five years, a foreclosure in the last 24 months, or one or more 60-day delinquencies in the last 24 months, among other indicators.
All of the following could be used to correctly describe Fannie Mae, except:
Government owned
Government sponsored
Private sector
Government regulated
The answer is government owned. Fannie Mae is a government-sponsored enterprise, regulated by but not owned by the federal government. It engages in secondary mortgage market transactions, purchasing conforming conventional loans, FHA-insured loans, VA-guaranteed loans, and US Department of Agriculture-guaranteed loans.
