National Component Test PRACTICE EXAM #1 Flashcards
National Component Test
A discount point is BEST described as a charge the borrower pays to:
A lender to decrease the interest rate on the mortgage loan
National Component Test
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 down payment at closing?
$25,000
National Component Test
If an applicant works 40 hours every week and is paid $13.52 per hour, what is the applicant’s monthly income?
$2,343.47
National Component Test
The requirement for private mortgage insurance is generally discontinued when the-loan-to-value ratio is falls below:
80%
National Component Test
Which of the following documents itemizes all settlement costs including lender charges?
HUD-1 form
National Component Test
According to the Truth-in-Lending Act (TILA), the term “refinance” applies to:
The satisfaction of an existing obligation and its replacement by a new obligation
National Component Test
What does a loan originator use to determine the estimated value of a property based on an analytical comparison of similar property sales?
An appraisal
National Component Test
Which of the following methods of disclosure does NOT meet the requirements of the Equal Credit Opportunity Act (ECOA)?
Telephone
National Component Test
The term “20 basis points” expressed as a percentage is:
0.20%
National Component Test
According to the Truth-in-Lending-Act (TILA), which of the following fees is EXCLUDED from the calculation of the annual percentage rate?
Hazard insurance
National Component Test
TILA is overseen by:
FRB - Federal Reserve Board
National Component Test
RESPA allows for the borrower to inspect the HUD-1 Settlement how many days prior to the actual settlement?
1 day
National Component Test
What three RESPA federally required disclosures must be provided within three days of receipt of the loan application for a purchase money loan?
GFE, Mortgage Disclosure Servicing Statement, a Special Information Booklet, which contains consumer information regarding various real estate settlement services
National Component Test
Another name for TILA is:
Regulation Z
National Component Test
The Equal Credit Opportunity Act is overseen by which agency:
FTC - Federal Trade Commission for Mortgage Broker and the OCC - The Office of the Comptroller of the Currency for Mortgage Bankers
National Component Test
Reg. B Section 202.5 of the Equal Credit Opportunity Act states that you cannot discourage an application for the following reasons:
Information regarding a spouse, Marital status, Income from alimony/child support, Sex of applicant, Dependent information, Race, color, religion, origin
National Component Test
The Fair and Accurate Transactions Act of 2003 (“FACT Act”) amended the Fair Credit Report (FCRA). This regulation is overseen by:
FTC - Federal Trade Commission
National Component Test
The Entities Regulated by the Fair and Accurate Transactions Act (The FACT Act) are:
Consumer Reporting Agencies (CRAs), users of Consumer Repots, and furnishers of information to Consumer Reporting Agencies (CRAs)
National Component Test
The Truth-in-Lending Act (TILA or Reg Z) regulates the following disclosure requirements:
Truth-in-Lending Disclosure Statement, Adjustable-Rate Disclosures, Right of Rescission (Right to Cancel), High-Priced Mortgage (Section 35), High-Fee Mortgages (Section 32)
National Component Test
The Truth-in-Lending Act (TILA or Reg Z) requires that disclosures must be:
Clear and Conspicuous, in writing, retainable by the consumer, reflect terms of the legal obligation, use estimates appropriately (and if based on estimates indicate this fact), provide to the applicant within 3 business days after receipt of an application for credit
National Component Test
The Home Ownership and Equity Protection Act of 1994 (HOEPA) addresses certain deceptive and unfair practices in home equity lending. It amends the Truth-in-Lending Act (TILA) and establishes requirements for certain loans with high rates and/or high fees. The rules for these loans are contained in what Section of Regulation Z?
Section 32
National Component Test
The Home Mortgage Disclosure Act - Regulation C (HMDA) was passed in 1975 and is overseen by what entity?
FRB - Federal Reserve Board
National Component Test
Which of the following types of loans are exempt from RESPA?
Loans on property with 25 acres or more
National Component Test
The National Flood Insurance Reform Act Regulation H, was passed in 1994 and is overseen by:
FRB - Federal Reserve Board
National Component Test
Violations for not determining the flood status, not notifying the borrower of the status and insurance requirements, failing to escrow premium if an escrow account is required for the other payments and/or failing to place insurance when required are:
$360 for each violation with a maximum $100,000 per calendar year
National Component Test
When the APR is out of tolerance, the creditor must do what?
Disclose the changes or provide a completely new disclosure statement so it is received at least three (3) business days before consummation.
National Component Test
Each early TILA disclosure must include what statement?
“You are not required to compete this agreement merely because you have received these disclosures or signed a loan application.”
National Component Test
HMDA data allows government agencies to do what?
Evaluate lender compliance with anti-discrimination laws
National Component Test
How is the conforming loan set each year?
The Federal Housing Finance Agency (FHFA) uses the October to October percentage increase/decrease in average housing prices in the Monthly Interest Rate Survey of the Federal Housing Finance Agency (FHFA) to adjust the conforming loan limits for the subsequent year.
National Component Test
Mortgage Fraud is investigated by the Federal Bureau of Investigation and is punishable by up to what:
30 years in federal prison or $1,000,000 fine, or both
National Component Test
Overvaluation of the fair market value of real estate is an ethical concern that may violate regulations or provisions of all but which of the following federal laws?
The Homeownership and Equity Protection Act
The Truth-in-Lending Act, The Financial Institutions Reform, Recovery and Enforcement Act, The Fair Housing Act
National Component Test
Yield spread premium is defined as:
A tool that a borrower uses to accept a higher interest rate in exchange for lower fees
National Component Test
Yield spread premium (YSP) must be disclosed on:
The GFE and The HUD-1
National Component Test
Amendments to which of the following federal laws created requirements for the verification and documentation of a borrower’s repayment ability?
Homeownership and Equity Protection Act
National Component Test
The Truth-in-Lending Act was enacted for what reason?
To protect consumers in credit transactions
National Component Test
Which of the following practices could cause a mortgage professional to violate RESPA’s escrow provisions and may constitute misappropriation?
Commingling funds
National Component Test
Advertising an attractive interest rate which a mortgage professional is not at liberty to offer is a major ethical offense and a violation of:
Regulation Z
National Component Test
Which of the following constitutes a “thing of value” that would violate RESPA?
A loan originator gives an airline travel voucher to an attorney for introducing a customer
National Component Test
Which of the following would address the principal and interest payments due on a loan?
The Amortization schedule
National Component Test
A(n)______is a loan with an interest rate that can adjust monthly and that offers a borrower a number of payment choices such as: 30 year fixed P&I / Interest-Only / 1% of the loan resulting in negative amortization.
Option ARM
