MCQs 1of4 Flashcards
A discount point is BEST described as a charge the borrower pays to
a. A lender to decrease the
interest rate on the
mortgage loan
b. A mortgage broker at the time of application to obtain a favorable rate
c..The seller as part of the closing costs of a loan
d. A lender to ensure against foreclosure
a. A lender to decrease the
interest rate on the
mortgage loan
A buyer has made an earnest money payment of $5,000. The buyer pays an additional $2,000. in option money to be credited at closing on a property with a sale price of $160,000. If the required down payment is 20%, how much additional money will the buyer need to provide toward the don payment at closing?
a. $32,000
b. $27,000
c. $30,000
d, $25,000
d, $25,000
If an applicant works 40 hours a week and is paid $13.52 per hour, what is the applicants monthly income?
a. $2,136.20
b. $2,343.47
c. .$2,379.52
d. $2,487.68
b. $2,343.47
Hourly x hours worked during week x weeks in a year (52) / 12 months
The requirements for private mortgage insurance is generally discontinued when the loan -to-value ratio falls below.
a. 20%
b. 50%
c..80%
d, 90%
c..80%
Which of the following documents itemizes all settlements costs including lender charges?
a. Agreement of Sale
b. HUD-1/Closing Disclosure
c..Form 1003
d, Forbearance agreement
b. HUD-1/Closing Disclosure
According to the Truth-in-Lending Act (TiLA), the term refinance applies to:
a. A change in payment
schedule
b. A reduction in annual
percentage rate
c..the renewal of a single
payment obligation with no
change in the original
terms
d, The satisfaction of an
existing obligation and its
replacement by a new
obligation
d, The satisfaction of an
existing obligation and its
replacement by a new
obligation
What does a loan originator use to determine the estimated value of a property based on an analytical comparison to similar property sales?
a. An appraisal
b. A market survey
c..An area survey
d, A cost-benefit analysis
a. An appraisal
Which of the following methods of disclosure does NOT meet the requirements of the Equal Credit Opportunity Act (ECOA)?
a. E-mail
b. Mailed letter
c. Telephone
d, Faxed letter
c. Telephone
The term “20 basis points” expressed as a percentage is
a. 0.02%
b. 0.20%
c..2.00%
d, 20.00%
b. 0.20%
According to the Truth-in-Lending Act (TILA), which of the following fees is EXCLUDED from the calculation of the annual percentage rate?
a. Hazard insurance
b. Wire transfer
c..Prepaid interest
d, Mortgage insurance
premiums
a. Hazard insurance
FHA loans are:
a. Partially guaranteed
b. 100% insured
c. Exempt
d, Entitled
b. 100% insured
The late fee for a conventional loan is:
a. 3% of principle and interest
b. 4% of principle and interest
c. 5% of principle and interest
d, 10% of principle and interest
c. 5% of principle and interest
A funding fee is required for a:
a. FHA loan
b. VA loan
c. Jumbo loan
d, Conventional loan
b. VA loan
A Mortgage Insurance Premium is required on:
a. FHA loan
b. VA loan
c. Jumbo loan
d, Conventional loan
a. FHA loan
The Mortgagee is:
a. Borrower
b. Lender
c..Closing Agent
d, Mortgage broker
b. Lender
The borrower does NOT sign which document
a. Deed
b. HUD-1/Loan Disclosure
c..Mortgage
d, Note
a. Deed
Which document is usually NOT recorded?
a. Assignment of mortgage
b. Note
c..Deed
d, Mortgage
b. Note
A mortgage title insurance policy is NOT:
a. Based loan amount
b. Transferable
c..Optional
d, Required by the lender
c..Optional
Which parties sign the deed?
a. Grantor, Grantee and two
witnesses
b. Grantor and two witnesses
c. Grantee and two
witnesses
d, Grantee only
b. Grantor and two witnesses
When the mortgagor and the mortgagee title insurance policies are issued at the same time, this is known as:
a. Simultaneous issue
b. Concurrent issue
c. Subsequent issue
d, Dual issue
a. Simultaneous issue
A shrubbery is on example of an:
a. Encumbrance
b. Easement
c. Entitlement
d, Acceptable title
impediment
d, Acceptable title impediment
A loan on personal property only is known as:
a. Package mortgage
b. Chattel mortgage
c. Furnishing mortgage
d, Exotic mortgage
b. Chattel mortgage
Which of the following is not a characteristic of a Tenants in Common form of ownership
a. Equal shares
b. Buy at different times
c. Right of survivorship
d, Ability to share
c. Right of survivorship
PITI payments do NOT include which of the following:
a. Principal
b. Funding Fee
c. Hazard Insurance
d, Interest
b. Funding Fee
Who does Fannie Mae hold responsible for the quality of an appraisal?
a. Appraiser
b. Borrower
c. Mortgage
d, Lender
d, Lender
Which law is known as Regulation B?
a. Truth-in-Lending
b. Real Estate Settlement
Procedures Act
c. Equal Credit Opportunity
Act
d, Patriot Act
c. Equal Credit Opportunity
Act
which law prohibits discrimination by lenders?
a. Truth-in-Lending
b. Real Estate Settlement
Procedures Act
c. Equal Credit Opportunity
Act
d, Patriot Act
c. Equal Credit Opportunity
Act
A property sold for $200,000 and was appraised at 180,000. The borrower received a loan for 150,000. What is the loan-to-value
a. 75%
b. 83.3%
c. 90%
d, 92.4%
b. 83.3%
How many days does a lender have to send an adverse action notice?
a. 5
b. 10
c. 30
d, 60
c. 30
The GFE/Loan Estimate must be mailed or given to the borrower within how many days after receiving the signed application?
a. 3 business days
b. 7 business days
c. 10 business days
d, 30 business days
a. 3 business days
The enforcement of a lien is known as a:
a. Closing
b. Foreclosure
c. Warranty inspection
d, Police Action
b. Foreclosure
What minimum percentage of ownership is a related service requires a conflict of interest disclosure?
a. 5%
b. 10%
c. 25%
d, 50%
b. 10%
What minimum percentage of
ownership qualifies an individual as self-employed?
a. 5%
b. 10%
c. 25%
d, 50%
c. 25%
A salaried employee may have to produce which of the following documents to obtain a loan
a. 90 day pay stubs
b. 2 years W2s
c. Profit and Loss statement
d, Balance sheet
b. 2 years W2s
How many months must left on an automobile lease to include it as a debt?
a. 2 months
b. 5 months
c. 10 months
d, It is always included
d, It is always included
Which law defines the right of rescission?
a. Truth-in-Lending
b. Real Estate Settlement
Procedures Act
c. Equal Credit Opportunity
Act
d, Patriot Act
a. Truth-in-Lending
How long after the application date must social security payments continue to be received in order to count as income?
a. 3 months
b. 10 months
c. 2 years
d, 3 years
c. 2 years
Credit reports on new construction are good for how many days?
a. 90 days
b. 120 days
c. 180 days
d, 225 days
b. 120 days
Which clause in a mortgage allows a lender to increase the interest rate?
a. Defeasance
b. Escalation
c. Acceleration
d, Exculpatory
b. Escalation
Which clause in a mortgage prevents the lender from foreclosing unless the borrower is in default?
a. Defeasance
b. Escalation
c. Acceleration
d, Exculpatory
a. Defeasance
The lender has how may days to send the Satisfaction of Mortgage letter to the borrower once the loan balance is paid?
a. 30 days
b. 60 days
c. 90 days
d, 120 days
b. 60 days
Which of the following increases cap rate?
a. Lower purchase price
b. Increase purchase price
c. Decrease cash flow
d, Increase interest rate
a. Lower purchase price
Who should applicants contact if they have questions about their credit score or credit information?
a. Credit reporting agency
b. Lender
c. Mortgage broker
d, Attorney
a. Credit reporting agency
Who is responsible for maintaining the national flood maps?
a. HUD
b. FEMA
c. FHA
d, VA
b. FEMA
THe VA appraisal is know as a:
a. CRV
b. Veteran appraisal report
c. Fannie Mae 1025
d, AVA
a. CRV
Certificate of Reasonable Value
Fannie Mae’s automated underwriting system is known as:
a. Fannie Mannie
b. Software helper
c. Desktop Underwriter
d, Loan Prospector
c. Desktop Underwriter
There are 10 days left in the month. The purchase price is $150,000, the loan amount is $100,000 and the interest rate is 6%. How much mortgage interest must the borrower pay at closing?
a. $164.38
b. $250.00
c. $440.20
d, $2,739.73
a. $164.38
Loan amount x interest rate/number days in year number of days left in month
100,000. x 0.06/365x10 =164.38
Private Mortgage Insurance is automatically canceled when the loan to value reaches what level?
a. 55%
b. 70%
c. 78%
d, 80%
c. 78%
Which types of loans are meant for rural areas?
a. VA
b. FHA
c. USDA
d, RAL
c. USDA
The purchase price of a home is $200,000 and the loan amount is $180,000. The borrower pays 6% interest with 1 discount point and 1 origination point. What is the cost of the points
a. $1,800
b. $2,000
c. $3,600
d, $4,000
c. $3,600
Discount points x loan amount = Point value
$180,000. x .02 = $3600.00
If the Gross Rent Multiplier (GRM) decreases, the property value:
a. Increases
b. Decreases
c. Does not change
d, Can increase or decrease
b. Decreases
What is the maximum amount of VA seller concessions
a. 2%
b. 3%
c. 4%
d, 5%
c. 4%
When a property increases in value for any reason this is known as:
a. Acceleration
b. Appreciation
c. Accumulation
d, Acclimation
b. Appreciation
Which appraisal approach is most suitable for an office building
a. Sales comparison
approach
b. Cost approach
c. Income capitalization
approach
d, Tenant collection approach
c. Income capitalization
approach
Which of the following is incorrect regarding an adjustable rate mortgage?
a. The index is fixed
b. The margin is fixed
c. There are rate caps on both
the adjustment period and
the life of the loan
d. LIBOR is a typical index
used
a. The index is fixed
Which of the following is NOT a fully amortized loan?
a. Term mortgage
b. Fixed-rate mortgage
c. Adjustable-rate mortgage
d, Bi-weekly mortgage
a. Term mortgage
Which of the following is a negatively amortizing loan?
a. Reverse mortgage
b. Balloon mortgage
c. Term mortgage
d, Wrap mortgage
a. Reverse mortgage
Fannie Mae does NOT require:
a. 6 months of bank
statements
b. Verifiable funds
c. 2 years of addresses
d, Stable 2 year work history
a. 6 months of bank
statements
A note is:
a. Document that coveys title
b. Pledge of the property as
collateral for the loan
c. Borrower’s IOU
d, Document that transfers
contractual rights to
another investor
c. Borrower’s IOU
A mortgage is the:
a. Document that conveys
title
b. Pledge of the property as
collateral for the loan
c. Borrower's IOU
d, Document that transfers
contractual rights to
another investor
b. Pledge of the property as
collateral for the loan
An adjustable-rate mortgage can adjust after 2 years with an adjustment cap of 3% per period and a lifetime cap of 7%. The starting interest rate is 4%. What is the maximum interest that can be charged at the time of the first adjustment
a. 5%
b. 7%
c. 10%
d, 11%
b. 7%
What is the FHA minimum down payment
a. $0
b. 3.5%
c. 5%
d, 10%
b. 3.5%
Which law is known as regulation C?
a. Real Estate Settlement
Procedures Act
b. Truth-in-Lending Act
c. Equal Credit Opportunity
Act
d. Home Mortgage
Disclosure Act
d, Home Mortgage Disclosure
Act
What is the minimum down payment for a USDA loan?
a. $0
b. 3.5%
c. 5%
d. 10%
a. $0
How many hours of continuing education are minimally required?
a. 8 hours every year
b. 14 hours every years
c. 14 hours every 2 years
d, 20 hours every 2 years
a. 8 hours every year
Who is responsible for completing the HUD-1/Loan Disclosure
a. The borrower
b. The closing agent
c. Loan originator
d, The Grantor
b. The closing agent
A mortgagor ‘s title insurance policy is:
a. Transferable
b. Required
c. Based on purchase price
d, Never used
C. Based on purchase price
The assignee of a mortgage and note is participating in the
a. Primary lending market
b. Capital market
c. Secondary mortgage
market
d, Options market
c. Secondary mortgage
market
VA loans are:
a. Partially guaranteed
b. Insured
c. Exempt
d, Entitled
a. Partially guaranteed
The late fee for a VA loan is
a. 3% of principle and interest
b. 4% of principle and interest
c. 5% of principle and interest
d, 10% of principle and interest
b. 4% of principle and interest
The purchase price of a home is $375,000 and the appraisal price is $350,000. If the first mortgage is in the amount of $200,000 and the second mortgage is $60,000. What is the combined loan-to-value ratio
a. 74.3%
b. 80.0%
c. 86.7%
d, 92.3%
a. 74.3%
The purchase price of a home is $375,000 and the buyer will assume a $175,000 first mortgage. The loan-to-value cannot exceed 85%. What is the maximum amount of the new second mortgage
a. $130,000
b. $143,750
c.$162,030
d, $171,260
b. $143,750
What clause in a mortgage allows the lender to call the entire loan balance due?
a. Defeasance
b. Escalation
c. Acceleration
d, Exculpatory
c. Acceleration
Which clause in a mortgage prevents the lender from recovering additional assets from the mortgagor if there is a shortfall in the foreclosure proceeds?
a. Forbearance
b. Escalation
c. Acceleration
d. Exculpatory
d. Exculpatory
What term describes the intentional delay of action on the part of the lender upon a borrower’s default?
a. Forbearance
b. Escalation
c. Acceleration
d. Exculpatory
a. Forbearance
Which of the following does not appear in a lock-in-agreement?
a. Expiration date
b. APR
c. Lock-in-fee
d, Interest Rate
b. APR
Freddie Mac was originally known as:
a. Federal Home loan
Mortgage Corporation
b. Federal National Mortgage
Association
c. Fair Discount Interest
Rates
d, Free Certificate of Deposits
a. Federal Home loan
Mortgage Corporation
Fannie Mae allows what amount of fees to be charged to a credit card?
a. 1% of the loan amount plus
$500 for the appraisal and
credit report
b. 2% of the loan amount plus
$500 for the appraisal and
credit report
c. 3% of the loan amount plus
$500 for the appraisal and
credit report
d, 4% of the loan amount plus
$500 for the appraisal and
credit report
a. 1% of the loan amount plus
$500 for the appraisal and
credit report
Loan Prospector can NOT be used for which type of loan
a. Conventional
b. VA
c. FHA
d, Commercial
d. Commercial
A five bedroom, one bathroom house is an example of
a. Appreciation
b. Functional obsolescence
c. Economic obsolescence
d. Residential allowance
b. Functional obsolescence
Which of the following is NOT a benefit of a FHA loan?
a. Favorable interest rates
b. Low down payment
c. No monthly mortgage
insurance
d. Assumable
c. No monthly mortgage
insurance
A loan closes on May 14. When is the first mortgage payment due?
a. May 15
b. June 01
c. Jun 15
d. July 01
d. July 01
Alimony payments must continue to be received for how long after the application date if they are to be included as income?
a. 10 months
b. 2 years
c. 3 years
d. 4 years
b. 2 years
Credit reports are good for how many days after they are pulled for qualifying purposes?
a. 60
b. 90
c. 120
d. 180
c. 120
When title is transferred and the buyer assumes no liability for the note, this type of transference is known as:
a. Free and clear
b. Subject to mortgage
c. Assumption
d. Novation
c. Subject to mortgage
Which of the follwoing is correct for an adjustable-rate mortgage?
a. index - margin = fully
indexed rate
b. Margin - index = fully
indexed rate
c. Index + Margin = fully
indexed rate
d. Index - margin = fully
indexed rate
c. Index + Margin = fully
indexed rate
The maximum term for a FHA loan is:
a. 15 years
b. 30 years
c. 40 years
d. 50 years
b. 30 years
Which of the following is not an involuntary lien?
a. IRS lien
b. Judgement lien
c. Mortgage lien
d. Mechanic’s lien
c. Mortgage lien
The most comprehensive form of ownership is:
a. Real Estate Investment
Trust
b. Fee simple absolute
c. Tenants in common
d. Joint tenancy
b. Fee simple absolute
Which is NOT a component of a valid contract
a. Agreement
b. Consideration
c. Two Witnesses
d. Competent parties
c. Two Witnesses
Which type of co-ownership permits the property to pass to an heir?
a. Collaboration
b. Tenants in common
c. Joint tenancy
d. Subordination
b. Tenants in Common
The economic concept which state that a knowledgeable buyer will pay no more for one property than they would pay for an equally desirable comparable property is:
a. Principle of Substitution
b. Principle of Highest and
Best Use
c. Principle of Market Value
d. Principle of Intelligent
Purchases
a. Principle of Substitution
Which law requires the interviewer to complete the Government Monitoring section on the 1003
a. Homeowner's Protection
Act
b. The Fair and Accurate
Credit Transaction Act
c. Truth-in-Lending
d. The Equal Credit
Opportunity Act
d. The Equal Credit
Opportunity Act
Which law entitles an applicant to a copy of his property appraisal report?
a. Homeowner's Protection
Act
b. The Fair and Accurate
Credit Transaction Act
c. Truth-in-Lending
d. The Equal Credit
Opportunity Act
c. Truth-in-Lending
Opportunity Act
Which law is also known as Regulation X
a. Truth-in-Lending
b. Real Estate Settlement
Procedures Act
c. Homeowner’s Protection
Act
d. The Equal Credit
Opportunity Act
b. Real Estate Settlement
Procedures Act
Which law protects an individual confidential information?
a. Truth-in-Lending
b. Real Estate Settlement
Procedures Act
c. Homeowner’s Protection
Act
d. Gramm-Leach-Bliley Act
d. Gramm-Leach-Bliley Act
Who Enforces RESPA violations
a. FTC
b. CFPB
c. FHA
d. FCC
b. CFPB
Which law requires that the Special Information booklet be given to borrowers?
a. Truth-in-Lending
b. Real Estate Settlement
Procedures Act
c. Homeowner’s Protection
Act
d. The Equal Credit
Opportunity Act
b. Real Estate Settlement
Procedures Act (RESPA)What is the fine for violating the Federal Do Not Call rules
a. $5,000
b. $11,000
c. $42,350
d. $60,000
c. $42,350
Which of the following is NOT a loan origination activity?
a. Assisting in a refinance
b. Assisting in a purchase
loan
c. Assisting in a loan
modification
d. Changing the name of
debtors on an existing loan
c. Assisting in a loan
modification
A unilateral contract is binding on:
a. One party
b. Two parties
c. The neighbor
d. No one
a. One party
Loan originator organizations must keep compensation records for how many years?
a. One
b. Two
c. Three
d. Four
c. Three years
Mortgage companies must submit a residential loan origination report to the NMLSR every
a. Month
b. Three months
c. Six months
d. Year
b. Three months
How many years must loan originator applicants wait after a felony fraud conviction in order to qualify for a license?
a. One year
b. Two years
c. Five years
d. They aren’t eligible for
licensing
d. They aren’t eligible for
licensing
How many years must loan originator applicants wait after having a loan origination license revoked in another state, in order to qualify for a license?
a. One year
b. Two years
c. They aren’t eligible for
licensing
d. They can qualify
immediately
c. They aren’t eligible for
licensing
Who chooses force-placed hazard insurance companies?
a. Lender
b. Homeowner
c. Attorney
d. Loan originator
a. Lender
Which of the following is required for an FHA Streamline refinance loan?
a. Credit verification
b. New appraisal
c. Current on mortgage
payments for the last three
month
d. Income and debt
verification
c. Current on mortgage
payments for the last three
month
What law addresses loan originators’ compensation issues
a. Truth-in-Lending
b. Loan Origination Rule
c. Equal Credit Opportunity
Act
d. Mortgage Compensation
Act
b. Loan Origination Rule
Commercial telemarketers are restricted to calling:
a. Only on weekends
b. Between 10 AM and 10 PM
c. Between 8 AM and 9 PM
d. There no restrictions
c. Between 8 AM and 9 PM
Commercial telemarketers must search the Do-Not-Call registry
a. Every 7 days
b. Every 31 days
c. Every 180 days
d. Once a year
b. Every 31 days
In order to send a fax advertisers must:
a. Have an established
business relationship with
recipient
b. Only fax t toll-free numbers
c. Include a personal cell
phone number on the
cover sheet
d. Not send faxes across state
lines
a. Have an established
business relationship with
recipient
The first page on an advertisers fax must include
a. Company’s mailing address
b. Company’s email address
c. Company’s phone number
d. Opt-out instructions
d. Opt-out instructions
What type of real estate co-ownership is only for married couples
a. Tenants in common
b. Joint tenancy
c. Tenancy by the entirety
d. Spousal tenancy
c. Tenancy by the entirety
Increasing neighborhood crime exemplifies what type of depreciation?
a. Economic obsolescence
b. Functional obsolescence
c. Physical deterioration
d. Unstable deterioration
a. Economic obsolescence
What agency was established to respond to consumer financial complaints?
a. Federal Deposit Insurance
Company
b. Federal Insurance office
c. Financial Stability Oversight
Council
d. Consumer Financial
Protection Bureau
d. Consumer Financial
Protection Bureau
What law protects homeowner from foreclosure-prevention scams?
a. Foreclosure Mediation Rule
b. Mortgage Assistance Relief
Services Rule
c. Truth-in-Lending Act
d. Homeowner’s Protection
Act
b. Mortgage Assistance Relief
Services Rule
Individuals must file a report when they transport how much cash out of the country?
a. $5,000 or more
b. $10,000 or more
c. $50,000 or more
d. $100,000 or more
b. $10,000 or more
What type of federal report is filed when financial institutions detect suspicious activity?
a. Suspicious Activity Report
b. Treasure Alert Report
c. Unaccounted Funds Report
d. Unexplained behavior
Report
a. Suspicious Activity Report
What agency becomes the receiver for some failing financial institutions?
a. Federal Deposit Insurance
Company
b. Federal Insurance Office.
c. Financial Stability Oversight
Council
d. Consumer Financial
Protection Bureau
a. Federal Deposit Insurance
Company
The ability-to-repay regulation applies to:
a. Equity lines of credit
b. Reverse mortgages
c. Investment home
purchases
d. Construction loans
c. Investment home
purchases
Which of the following is NOT a feature of a qualified mortgage?
a. Positive amortization
b. 30 year maximum loan
term
c. Maximum debt-to-income
ratio of 50 percent
d. No interest only periods
c. Maximum debt-to-income
ratio of 50 percent
Individuals submit an annual Report of Foreign Bank and Financial Accounts to:
a. IRS
b. Mortgage lender
c. Federal Trade Commission
d. Fannie Mae
a. IRS
Which of the following is part of the Mortgage Assistance Relief Services Rule
a. Negotiators may be paid
an up-front fee
b. Borrowers must pay a fee
if they cancel their contract
with the negotiator
c. Negotiators can't interfere
with communication
between borrowers and
lenders
d. Negotiators only have to
present reasonable lender
offers to the borrower
c. Negotiators can’t interfere
with communication
between borrowers and
lenders
Loan originators are’t allowed to receive compensation:
a. Based on loan terms
b. From a consumer
c. From a lender
d. Based on the performance
of the loan
a. Based on loan terms
High-cost home loans require a borrower to:
a. Receive quotes from
multiple lenders
b. Receive homeownership
counseling
c. Receive free flood
insurance
d. Receive 3% seller
concessions
b. Receive homeownership
counseling
The Truth-in-Lending Disclosure does NOT include
a. APR
b. Finance charge
c. Total amount of payments
d. Borrower’s credit score
d. Borrower’s credit score
Which of the following is NOT true of high-cost home loans?
a. Borrower must have a
documented ability to pay
the loan
b. Borrower must have a
minimum credit score of
650
c. Prepay penalties are
prohibited
d. Most balloon payments are
prohibited
b. Borrower must have a
minimum credit score of
650
Which of the following does NOT have zero variance between the GFE and HUD-1
a. Title insurance
b. Real estate transfer taxes
c. Loan origination fees
d. Interest Rate
a. Title insurance
Which of the following can have an unlimited variance between the GFE and HUD-1
a. Hazard insurance
b. Recording fees
c. Appraisal
d. Credit report fee
a. Hazard insurance
What happens if the acceptable variance between the GFE and HUD-1 is exceeded?
a. Loan originator faces
criminal penalties
b. The loan can't be funded
c. The excess is refunded to
the borrower with 30 days
d. The excess is refunded to
the borrower with 60 days
c. The excess is refunded to
the borrower with 30 days
Which law requires businesses to print only the last five card numbers on a credit card receipt?
a. Homeowner Protection Act
b. Fact Act
c. Gramm-Leach-Bliley
d. Dodd-Frank
b. Fact Act
What happens if the acceptable variance between the Loan Estimate and the Closing Disclosure is exceeded
a. Loan originator faces
criminal penalties
b. The loan can't be funded
c. The excess is refunded to
the borrower with 30 days
d. The excess is refunded to
the borrower with 60 days
d. The excess is refunded to
the borrower with 60 days
A higher-priced home loan is one that has
a. More than 5% in fees and
points
b. More than 8% in fees and
points
c. APR exceeds the average
prime rate by at least 1.5%
for the first-lien loans
d. Interest rate is higher than
10%
c. APR exceeds the average
prime rate by at least 1.5%
for the first-lien loans
What is the shortest time in which a mortgage purchase loan can close?
a. 3 business days
b. 7 business days
c. 14 days
d. 30 days
b. 7 business days
What type of loan gives a borrower money each month?
a. Graduated payment
mortgage
b. Reverse mortgage
c. Package mortgage
d. Wholesale mortgage
b. Reverse mortgage
What type of loan is a non-recourse loan
a. Graduated payment
mortgage
b. Reverse mortgage
c. Package mortgage
d. Wholesale mortgage
b. Reverse mortgage
A lender won’t lose money funding what type of loan?
a. FHA
b. VA
c. Conventional
d. Construction
a. FHA
A lender that offers mortgage loans directly to the public is a:
a. Participating lender
b. Private lender
c. Wholesale lender
d. Retail lender
d. Retail lender
Which disclosure can be initially sent to the borrower within 45 days after closing?
a. Affiliated Business
Arrangement
b. Good Faith Estimate
c. Truth-in-Lending
d. Initial Escrow Statement
d. Initial Escrow Statement
What type of loan is short-term with money advanced in stages?
a. Package
b. Construction
c. Wraparound
d. Balloon
b. Construction
A loan originator who accepts an upfront fee for negotiating a loan modification is violating which law
a. RESP
b. TILA
c. HMDA
d. MARS
d. MARS
A lender that works with licensed loan originators is a:
a. Participating lender
b. Private lender
c. Wholesale lender
d. Retail lender
c. Wholesale lender
What type of mortgage is not guaranteed or insured by the government
a. FHA
b. VA
c. USDA
d. Conventional
d. Conventional
What agency became the conservator of Fannie Mae and Freddie Mac
a. Federal Housing Finance
Agency
b. Consumer Financial
Protection Bureau
c. U.S. Department of
Housing
and Urban Development
d. Internal Revenue Service
a. Federal Housing Finance
Agency
HMDA requires lenders to submit their loan application register to the:
a. Library of Congress
b. Federal Financial
Institutions Examination
Council
c. Federal department of
Books and Records
d. Nationwide Mortgage
Licensing System and
Registry
b. Federal Financial
Institutions Examination
Council
MIP is associated with what type of loan?
a. FHA
b. VA
c. Interest-Only
d. Conventional
a. FHA
UFMIP is associated with what type of loan
a. FHA
b. VA
c. Interest-Only
d. Conventional
a. FHA
What law requires ARM borrowers to receive the Consumer Handbook on Adjustable Rate Mortgages?
a. RESP
b. ECOA
c. Gramm-Leach-Bliley
d. TILA
d. TILA
What law allowed the government to assume control over Fannie Mae and Freddie Mac?
a. Homeowners Protection
Act
b. Housing and Economic
Recovery Act
c. Home Mortgage Disclosure
Act
d. Truth-in-Lending Act
b. Housing and Economic
Recovery Act
What law passed in 2010 in response to the financial meltdown and recession?
a. Truth-in-Lending
b. Gramm-Leach-Bliley
c. Dodd-Frank Wall Street
Reform and Consumer Act
d. Home mortgage
Disclosures Act
c. Dodd-Frank Wall Street
Reform and Consumer Act
Lenders must maintain an escrow account for higher-priced mortgages for a:
a. 1 year
b. 3 years
c. 5 years
d. No escrow account is
required
c. 5 years
How much of a down payment does a borrower need if he doesn’t want to pay PMI?
a. 5%
b. 10%
c. 15%
d. 20%
d. 20%
Borrowers with a high-cost loan can rescind the loan with how many business days?
a. 3
b. 7
c. 15
d. There is no rescission
period
a. 3
Acceptable income for loan qualification includes:
a. 1 year of sales commissions
b. Disability benefits with 2
years remaining
c. 1 year of unemployment
benefits
d. 2 years of bonuses
d. 2 years of bonuses
Who determines the underwriting guidelines for conforming loans?
a. Federal Housing Finance
Agency
b. Federal Trade Commission
c. U.S. Department of
Housing
and Urban Development
d. Fannie Mae
d. Fannie Mae
Which appraisal method subtracts a value for depreciation?
a. Sales Comparison
b. Cost
c. Income Capitalization
d. Gross Income Multiplier
b. Cost
What is the Fannie Mae appraisal report form?
a. USPAP
b. HVCC
c. USAPP
d. URAR
d. URAR
What lien has the highest priority and is paid off first when a property is sold?
a. Property tax
b. Senior mortgage lien
c. Mechanics lien
d. Judgement lien
a. Property tax
What document is assigned along with mortgage
a. Deed
b. GFE/Loan Estimate
c. HUD-1/Closing Disclosure
d. Promissory note
d. Promissory note
When does the borrower pay the first year of hazard insurance premium?
a. Each month for 12 months
b. Before or at closing
c. 6 months premium paid at
closing; 6 month premium
due 30 day after closing
d. Every 2 months for a total
of 6 payments during the
first year after closing
b. Before or at closing
How many times may a loan originator receive credit for the same continuing education coarse?
a. 1
b. 2
c. 3
d. No limit
a. 1
What type of valuation takes into account annual rent as well as other generated income?
a. Sales comparison
b. Cost
c. GRM
d. GIM
d. GIM
What term describes the process of a senior mortgage lien-holder voluntarily changing into a junior mortgage lien holder?
a. Demotion
b. Assignment
c. Alienation
d. Subordination
d. Subordination
Which of the following is an appropriate adjustment in a market data appraisal?
a. The comp has a two-car
garage and the subject has
a on-car garage. Subtract
$5,000 from the comp's
sale price
b. The subject has a pool and
the comp doesn't. Subtract
$15,000 from the subjects's
estimated value
c. The comp has a fireplace
and subject doesn't. Add
$1,200 to the comp's sale
price
d. The subject has a dirty
yard, and the comp is
professionally landscaped.
Add $8,000 to the
subjects estimated value.
a. The comp has a two-car
garage and the subject has
a on-car garage. Subtract
$5,000 from the comp's sale
priceWhich of the following is NOT a valid component of a contract
a. Competent parties
b. Mutual agreement
c. Down payment
d. Legal object
c. Down payment
Which of the following is NOT a valid requirement for a deed
a. Names of the seller and the
buyer
b. Must be signed in blue ink
c. Legal description of the
property
d. Signed by grantor and two
witnesses
b. Must be signed in blue ink
Which of the following is NOT required for self-employed qualification?
a. 2 years business tax returns
b. 60 day pay stub
c. Company balance sheet
d. Company profit and loss
statement
b. 60 day pay stub
Ginnie Mae:
a. Buys and sells loans
b. Regulates loan originators
c. Guarantees Ginnie-Mae
Mortgage-backed
securities
d. Sets guidelines for
government loans
c. Guarantees Ginnie-Mae
Mortgage-backed securities
Which law requires lenders to train employees to recognize the Red Flags of Identity.
a. Homeowner's Protection
Act
b. Fact Act
c. Gramm-Leach-Bliley
d. Dodd-Frank
b. Fact Act
A California residential loan originator referred a borrower to a Florida residential loan originator. The California loan originator can receive a referral fee.
a. Only if he is also licensed in
Florida
b. Only if the Florida loan
originator is a licensed in
California
c. Only with written
permission from the lender
d. Never
d. Never
Which law requires loan originators to shred credit reports?
a. Homeowner's Protection
Act
b. Fact Act
c. Gramm-Leach-Bliley
d. No such law
d. No such law
Higher-priced loans for a flipped home require a second appraisal that is:
a. Performed by a different
appraiser at no charge to
the borrower
b. Performed by a different
appraiser and paid for by
the borrower
c. Performed by the same
appraiser using different
comparables at no charge
to the borrower
d. Performed by the same
appraiser using different
comparables and paid for
by the borrower
a. Performed by a different
appraiser at no charge to the
borrower
If a consumer makes an inquiry to a company, the company can call for:
a. 6 weeks
b. 3 months
c. 6 months
d. 18 months
b. 3 months
Which of the following is NOT a loss mitigation option?
a. Loan modification
b. Refinance
c. Deed-in-leu
d. Foreclosure
d. Foreclosure
Which of the following is NOT part of the primary mortgage market?
a. Commercial bank
b. Seller financier
c. Insurance company
d. Credit union
c. Insurance company
Which is NOT a possible indication of a short sale fraud?
a. Buyer is a business partner
of the seller
b. Seller has a poor credit
history
c. Seller has an excellent
credit history
d. The property appraised
significantly below
neighboring properties
b. Seller has a poor credit
history
An individual with a good credit history who is paid to represent himself as a buyer is a :
a. Straw buyer
b. Particular buyer
c. Promotion buyer
d. Demotion buyer
a. Straw buyer
A deficiency judgement occurs when a:
a. Borrower needs additional
down payment funds
b. Seller wins a breach of
contract lawsuit against
the buyer
c. Lender sues for borrower's
personal assets to pay
balance of the note
d. Borrower needs additional
private mortgage insurance
c. Lender sues for borrower’s
personal assets to pay
balance of the note
What type of fraud occurs when a loan originator submits and closes on loan application with multiple lenders?
a. Chunking
b. Equity skimming
c. Buy and bail
d. Phantom sale
a. Chunking
What type of fraud occurs when a loan originator changes a borrower’s birth date to make him appear older
a. Reverse mortgage
b. Equity skimming
c. Buy and bail
d. Phantom sale
a. Reverse mortgage
What type of of funding occurs when a lender borrows money from an investor and assigns the mortgage and note to the investor immediately after closing?
a. Warehouse
b. Table
c. Direct investor
d. Temporary
b. Table
What is the practice called when a real estate agent only shows Hispanic buyers properties in Hispanic neighborhoods?
a. Redlining
b. Steering
c. Blockbusting
d. Conversion
b. Steering
What is the practice called when a real estate agent spreads rumor that a specific ethnic group is planning to move into the neighborhood and advises residents to sell before property values drop?
a. Redlining
b. Steering
c. Blockbusting
d. Conversion
c. Blockbusting
What is the term used when a lender allows a tenant’s improvements to be applied toward down payment funds when the tenant purchase the home?
a. Home improvement funds
b. Restoration funds
c. Sweat equity
d. Good faith money
c. Sweat equity
Anything that affects title to a property such as liens, easements or restrictions is a (an):
a. Encumbrance
b. Barrier
c. Covenant
d. Egress
a. encumbrance
What is the general term for the security pledged for the payment of a loan?
a. Repository
b. Collateral
c. Transaction account
d. Good faith
b. Collateral
Purchase issues that must be resolved before closing are called
a. Dynamics
b. Resolutions
c. Contingencies
d. Operations
c. Contingencies
Local laws that control the use of the land are called:
a. Dynamics
b. Resolutions
c. Contingencies
d. Zoning
d. Zoning
Which of the following is NOT characteristic of a warranty deed?
a. Guarantees the seller is
true owner of the property
b. Guarantees the seller has
the legal right to sell
c. Guarantees that there are
no undisclosed lies on the
property
d. Guarantees that the sale
price is fair and reasonable
d. Guarantees that the sale
price is fair and reasonable
Monthly income before taxes and other deductions is known as:
a. Gross income
b. Net income
c. Assured income
d. Household income
a. Gross income
What protects lenders against losses when a borrower defaults on a loan?
a. Transactional account
b. Mortgage insurance
c. Deed restrictions
d. Title insurance
b. Mortgage insurance
Which federal agency guarantees mortgage back securities that are based on FHA and VA loans?
a. FHA
b. VA
c. Ginnie Mae
d. Fannie Mae
c. Ginnie Mae
The lowest possible interest rate for an ARM loan is known as the:
a. Floor
b. Basin
c. Basement
d. Ground
a. Floor
An FHA reverse mortgage loan is a:
a. FHARM
b. HECM
c. RMFHA
d. UFFHA
b. HECM
What type of deed transfers ownership without making any guarantee of clear title?
a. General warranty deed
b. Special warranty deed
c. Power of attorney deed
d. Quitclaim deed
d. Quitclaim deed
What is the difference between the purchase price and the mortgage amount
a. Good faith money
b. Escrow
c. Down payment
d. Discount points
c. Down payment
What is a claim against a property for the payment of a debt?
a. Lien
b. Title
c. Egress
d. Arbitration
a. Lien
What is the interest rate commercial banks charge their most creditworthy customers?
a. Partial rate
b. Prime rate
c. Premium rate
d. Preferred rate
b. Prime rate
What is the current name for the Federal Home Loan Mortgage Corporation?
a. Fannie Mae
b. Freddie Mac
c. FHA
d. Fed
b. Freddie Mac
The most common mortgage that a private lender has is a conventional mortgage, but what exactly is this type of mortgage?
A. An insured mortgage.
B. A government-backed mortgage.
C. A private lender mortgage.
D. An endorsed FHA mortgage.
Correct answer: C
C is correct because a conventional mortgage is the most popular private
lender loan you can get for a home. Three factors best categorize a conventional mortgage: no government insurance, high-interest rates, and high credit rating requirements.
