Mortgage Flash Cards

Question 1

What is the required pass rate for the NMLS Test and how long is it?

Answer 1

75% of 115 questions. The test has 120 questions with 5 questions that are ungraded.

Question 2

What is important to remember about taking the test?

Answer 2

Read the questions twice, slowly, but do not take over 30 seconds per question the first time through

Question 3

What is the requirement under Fair Lending, Fair Housing, and ECOA?

Answer 3

All consumers have the right to apply for a loan unless they are under 18 years of age

Question 4

Which Law and Regulation is Home Ownership Equity Protect Act (HOEPA) under?

Answer 4

Truth in Lending Act (TILA) and Reg Z

Question 5

Which items are restricted under HOEPA?

Answer 5

Predatory Lending, Abusive Lending Practices, Negative Amortization, Prepayment Penalties, Balloon Lending, Subprime Lending, Equity Stripping, and not meeting Ability to Repay (ATR) requirements

Question 6

What is the minimum period for a Balloon mortgage?

Answer 6

A 30-year amortized loan that is due in 60 months

Question 7

What is the Average Prime Offered Rate?

Answer 7

APOR – an index that is published weekly. It is added to High-Cost and Higher-Priced Triggers.

Question 8

Who publishes the APOR Index?

Answer 8

FFIEC, the Federal Financial Institutions Examination Council

Question 9

What is the Regulation for High-Cost Loans?

Answer 9

Section 1026.32

Question 10

What are the three triggers for High-Cost Lending?

Answer 10

6.5% on a first Mortgage, 8.5% on a second Mortgage, and a 5% fee trigger for loans over $20,000

Question 11

What are the triggers for Higher-Priced lending?

Answer 11

1.5% for first Mortgages, 3.5% for 2nd mortgages and no fee trigger

Question 12

How do you calculate whether a loan exceeds the Higher-Priced mortgage limits?

Answer 12

Add the APOR index to 1.5% on a first mortgage. The Annual Percentage Rate (APR) cannot exceed the two numbers together.

Question 13

What are the requirements for a High-Cost Loan?

Answer 13

Tax and insurance escrows for the first five years of the loan, mandatory counseling and possibly two appraisals. Cannot use an Appraisal Waiver from Fannie or Freddie. No Balloons are allowed.

Question 14

What are the requirements for a Higher-Priced Loan?

Answer 14

Tax and insurance escrows for the first five years of the loan. Cannot use an Appraisal Waiver from Fannie or Freddie.

Question 15

Prepayment Penalties are not allowed by which agencies?

Answer 15

Fannie Mae, Freddie Mac, USDA, FHA, and VA

Question 16

What is collateral?

Answer 16

Property that is used as security against a debt

Question 17

What is Net Monthly Income?

Answer 17

Take-home pay after taxes and payroll deductions

Question 18

What is a non-liquid asset?

Answer 18

A type of asset that is not easily turned into cash. Real estate is considered non-liquid.

Question 19

What are the five parts of ECOA?

Answer 19

Age, Discrimination, Underwriting, Appraisal, and Adverse Action

Question 20

What is the minimum age under ECOA to obtain a mortgage loan?

Answer 20

18 years or older

Question 21

ECOA has discriminatory items. What can’t you do with them?

Answer 21

You cannot use them to make or decline a loan

Question 22

What are the discriminatory items under ECOA?

Answer 22

Sex, Marital Status, Race, Color, Age, Religion, National Origin, Public Assistance, and Sexual Orientation

Question 23

What can you ask on Marital Status?

Answer 23

Married, unmarried, or separated

Question 24

Which four areas should you never ask about?

Answer 24

Race, Color, Religion, and Nationality

Question 25

What is the requirement for Public Assistance?

Answer 25

It must be considered, even though you may not be able to use it for qualifying

Question 26

How long, after a complete underwriting package is delivered to the underwriter, does a decision have to be made?

Answer 26

30 days, but this may be extended if the package is not complete

Question 27

How many days before closing must the appraisal be delivered to the borrower?

Answer 27

Three business days before, unless there is an appraisal waiver issued, then the borrower must be informed that an appraisal will not be done unless they request it

Question 28

How long after a loan is declined or cancelled must an Adverse Action
notice be sent?

Answer 28

30 days from the decision, explaining the reason

Question 29

Under the Fair Housing Act, what are three protected bases that are different from those covered by ECOA?

Answer 29

Disability, Familial Status, and Age