Questions Flashcards

Question

Compensating factors refer to

Answer 1

underwriting considerations that exceed standard underwriting parameters. The more compensating factors a loan application has, the easier it may be to overlook a weaker area. For example, although a representative credit score may be lower than ideal, if the applicant has low DTI ratios, a sizable down payment, and significant reserves, the underwriter might be able to overlook the lower credit score.

Answer 2

Chunking occurs when a third party convinces an uninformed borrower to invest in a property (or properties), with no money down and with the third party acting as the borrower's agent. ... Without the borrower's knowledge, the third party submits loan applications to multiple financial institutions for various properties.

Answer 3

A disparate impact occurs when a lender applies a racially (or otherwise) neutral policy or practice Page 3 Federal Fair Lending Regulations and Statutes: Overview equally to all credit applicants but the policy or practice disproportionately excludes or burdens certain persons on a prohibited basis.

Answer 4

With the exception of relocation and VA loans, both the borrower and co-borrower are analyzed equally with regards to creditworthiness. Therefore, unless it is a relocation or a VA loan, it makes no difference as to who appears as the primary borrower and who appears as the additional borrower. In a relocation loan scenario, the person whose job is relocating them should appear as the primary borrower. In a VA loan scenario, the borrower with the COE should be considered the primary borrower.

Answer 5

An applicant’s race is the best possible answer out of the provided choices. An applicant’s race may never be a part of any decision-making process and, aside from asking the questions through HMDA allowances, race may never be inquired about or discussed. Although a mortgage professional is prohibited from probing into the specifics of an applicant’s marital status, the applicant may be asked whether s/he is married, separated, or unmarried. Although age may never be used as a factor in determining credit worthiness, the applicant may be asked for his or her date of birth to determine that s/he is of the age of majority and legally able to apply. The application’s declaration section asks the applicant to attest to whether or not s/he is a U.S. citizen or a Permanent Resident Alien. If s/he is neither, additional documentation may be required to demonstrate the applicant’s legal ability to reside or be in the U.S.

Answer 6

Foreign Account Tax Compliance Act The Foreign Account Tax Compliance Act (FATCA) is an important development in U.S. efforts to combat tax evasion by U.S. persons holding accounts and other financial assets offshore.

Answer 7

home equity lines of credit, reverse mortgages, mortgages not secured by real property, loans made by persons not considered creditors, certain no-interest second mortgage loans used for down-payment assistance, property rehabilitation, energy efficiency, and foreclosure avoidance.

Answer 8

The Truth in Lending Act (TILA) protects you against inaccurate and unfair credit billing and credit card practices. It requires lenders to provide you with loan cost information so that you can comparison shop for certain types of loans.

Answer 9

The document establishing separation from the U.S. military is the DD214.

Answer 10

(verification of employment)

Answer 11

VOD (verification of deposit) - VOD (verification of deposit) may be requested of the financial institution holding the applicant’s assets in order to substantiate the value of the disclosed asset accounts as well as the account activity.

Answer 12

Even though no money had changed hands, the offer itself constituted a RESPA violation.

Answer 13

Uniform Residential Appraisal Report

Answer 14

The Fannie Mae form 1004 (Freddie Mac form 70) is the primary appraisal type used for residential financing. It is also referred to as the Uniform Residential Appraisal Report (URAR).

Answer 15

The purpose of the USA Patriot Act is to deter and punish terrorist acts in the United States and around the world.

Answer 16

A NINA (no income/no assets) mortgage describes a loan extended to a borrower who may have little ability to repay the loan.

Answer 17

The Self-Employed Contributions Act (SECA) tax is a levy from the U.S. government on those who work for themselves, rather than for an outside company. It requires self-employed workers to contribute tax equivalent to both the employer and employee portions of the Federal Insurance Contributions Act (FICA) tax, which funds Social Security and Medicare.

Answer 18

Alt-A loans often refer to loans with minimal-to-no documentation. The NINA is a no-income, no-asset Alt-A loan.

Answer 19

Higher Priced Mortgage Loans

Answer 20

Regulation Z Section 35 defines an HPML as a loan secured by a primary residence where the APR exceeds Freddie Mac’s “average prime offer rate” (APOR) for a comparable transaction as of the date the interest rate is set by the following: Conforming and High Balance Loan Amounts * 1.5% or more for a loan secured by a first lien, or * 3.5% or more for a loan secured by a subordinate lien.

Answer 21

The Home Ownership and Equity Protection Act (HOEPA) of 1994 defines high-cost mortgages. These also are known as Section 32 mortgages because Section 32 of Regulation Z of the federal Truth in Lending Act implements the law. It covers certain mortgage transactions that involve the borrower's primary residence. Section 32 loans have been so-named since 1994, when the Home Ownership and Equity Protection Act (HOEPA) was passed to curb abusive lending practices that included high fees and high interest rates. The resulting high-cost loans are also called HOEPA loans or Section 32 loans. It’s a misnomer to refer to a mortgage as an HOEPA Section 35 loan, because these loans are correctly called HOEPA Section 32 loans.

Answer 22

Section 8 of RESPA prohibits a person from giving or accepting any thing of value for referrals of settlement service business related to a federally related mortgage loan. It also prohibits a person from giving or accepting any part of a charge for services that are not performed.

Answer 23

All eligible VA borrowers must demonstrate their eligibility by producing a Certificate of Eligibility (COE). To be considered for full entitlement, the COE must reflect an entitlement amount of $36,000.

Answer 24

Conventional financing guidelines currently limit seller’s concessions to 3% of the purchase price when the borrower’s down payment is less than 10%,

Answer 25

6% of the purchase price when the borrower’s down payment is equal to or greater than 10% but less than 25%

Answer 26

9% when the borrower’s down payment is equal to or greater than 25%

Answer 27

concessions are always limited to 2% of the purchase price when the intended use of the home being purchased is for investment purposes

Answer 28

A RESPA violation can result in a prison sentence of up to one year along with a fine of up to $10,000. These penalties apply per occurrence.

Answer 29

When an offer to buy is accepted and a purchase contract signed, the buyer often pays the seller an earnest funds deposit as a measure of good faith. This deposit gives the seller incentive to remove the home from active MLS sales listings knowing that, if the buyer backs out without cause, the seller may retain the deposit. This deposit is ultimately credited back to the buyer at closing as a settlement fee credit.

Answer 30

HMDA, also known as the Home Mortgage Disclosure Act, was enacted in 1975 and operates under Regulation C.

Answer 31

Home Ownership and Equity Protection Act

Answer 32

The Home Ownership and Equity Protection Act (HOEPA) was enacted in 1994 as an amendment to the Truth in Lending Act (TILA) to address abusive practices in refinances and closed-end home equity loans with high interest rates or high fees.

Answer 33

Affiliated Business Arrangement Disclosure

Answer 34

Fully Indexed Accrual Rate

Answer 35

As the loan is described by the overall term followed by the balloon call term, this type of balloon loan does not contain a conditional right to modify.

Answer 36

Seven precise business days must elapse after the issuance of the loan estimate before the loan would be allowed to close. The purpose of this mandatory waiting period is to ensure that the applicant has ample time to review the loan’s particulars and carefully contemplate the transaction into which they’re considering entering.

Answer 37

no later than 3 general business days from the date

Answer 38

Obligated payments of child support stem from court orders and/or divorce decrees. Whether an individual is actively paying it or not is irrelevant. If someone is court ordered or otherwise required to pay child support, that support payment must be included in his or her DTIs and the liability manually entered onto the application. The only time when court ordered child support could be excluded from an applicant’s DTIs is when there are 10 or fewer months left to pay it.

Answer 39

The Gramm-Leach-Bliley Act protects the sanctity of individuals’ non-public, personal information. Non-public, personal information is information that cannot be secured through a general records search or a Freedom of Information/Privacy Act request. Public personal information is information that may be secured through those means.

Answer 40

an unscrupulous individual convinces a lender to release the lien on a property for less than owed based on an artificially deflated value which that individual then pays to the lender to secure ownership of the property. Once the lien is released, the fraudster then sells the property for its higher, true value and pockets the difference.

Answer 41

The Gramm-Leach-Bliley Act requires financial institutions to provide all customers with a copy of its privacy notice at the time when the customer relationship is established. This would most often occur at the closing. The financial institution is also required to provide its privacy notice annually thereafter or, in some cases, it may be allowed to post it online.

Answer 42

The combined loan-to-value (CLTV) ratio is the ratio of all secured loans on a property to the value of a property. Lenders use the CLTV ratio to determine a prospective home buyer's risk of default when more than one loan is used.

Answer 43

If a licensee does not renew their license by midnight on December 31st, their license expires, and they are immediately rendered inactive. They have until the last day of February to renew their license by paying the appropriate renewal fees, demonstrating completion of the appropriate continuing education, and paying a late charge. Failure to renew by the last day of February requires that the loan originator repeat the entire licensing process.

Answer 44

Model State Law was a document created by the Conference of State Bank Supervisors (CSBS) and the American Association of Residential Mortgage Regulators (AARMR) to guide states in implementing legislation required by the SAFE Act.

Answer 45

containing a conditional right to modify.

Answer 46

a Notice of Action Taken advising that his or her loan application was approved, an Adverse Action Notice declining the application, or a Notice of Incomplete Application advising that needed documentation is missing and the applicant must provide it within an allotted timeframe for his or her application to receive further consideration.

Answer 47

social security number, date of birth, income, property address, estimated property value (or property purchase price), and loan amount

Answer 48

The conditions for which a balloon loan may be conditionally modified are: the home must be owner occupied, the loan must be current, there cannot be any subordinate liens attached to the property, and the new rate may not exceed the original rate by more than 5%.

Answer 49

MIP is only removed after 11 years as long as the initial down payment was equal to or greater than 10%.

Answer 50

Fair and Accurate Credit Transactions Act (FACTA)

Answer 51

surround affording consumers easy access to accurate credit information along with the prevention of identity theft.

Answer 52

the Gramm-Leach-Bliley Act

Answer 53

Every FHA loan requires both an annual mortgage insurance premium (AMIP) collected through the monthly payment and an upfront mortgage insurance premium (UFMIP) which, although it can be paid in cash at the time of closing, is generally financed into the loan amount.

Answer 54

an individual who uses a company’s products and services but lacks a formal relationship with that business. (Example using an ATM of that bank but does not have an account with that bank.

Answer 55

may also use that business’ products and services - also has a formal business relationship with that institution.

Answer 56

consist of loans that are used to finance the initial construction of a dwelling, bridge loans with terms of 12 months or less, reverse mortgages, and home equity lines of credit.

Answer 57

Violators may be fined up to $43,280 per occurrence.

Answer 58

The purpose of (the SAFE) … Act is to protect consumers seeking mortgage loans and to ensure that the mortgage lending industry is operating without unfair, deceptive, and fraudulent practices on the part of mortgage loan originators.

Answer 59

Suspicious Activity Reports

Answer 60

Lender Paid Mortgage Insurance - (LPMI), would result in the lender paying a one-time PMI premium on the borrower’s behalf, typically in exchange for a higher interest rate.

Answer 61

Although above-par pricing would provide funds which could be used to supplement cash towards a down payment, it would be highly unlikely that the credit could equate to 10% of any home’s purchase price

Answer 62

Piggyback financing would provide two loans, one at 80% and one to supplement the other 10% needed to avoid paying PMI.

Answer 63

is s/he has a militarily-incurred disability defined by the VA medical system as 10% or greater.

Answer 64

Charges paid by the creditor, other than loan originator compensation paid by the creditor that is required to be included in points and fees can be excluded from points and fees. HOEPA loans may include pre-payment penalties as long as the pre-payment penalty occurs within the first five years (other conditions also apply). Increasing the rate after default is never permitted. When the purpose of the loan is for home improvement, the funds must be disbursed either directly to the homeowner, in the form of a check made payable to both the home owner and the contractor, or to a third-party escrow company agreed upon by all parties. HOEPA balloon loans are permitted as long as the balloon component does not call the loan within the first five years.

Answer 65

For comparative shopping purposes, as well as to inform customers of their true interest expenses, the government requires lenders to disclose the cost of the credit as both an interest rate and a dollar amount. As an interest rate, this cost is known as the APR or Annual Percentage Rate.

Answer 66

According to the Homeowners Protection Act, a good payment history requires a 24-month payment history review. During the most recent 24 months, the customer may not have had any 60-day late payments, and, within the most recent 12 months, the customer may not have had any 30-day late payments.

Answer 67

When used solely to satisfy reserve requirements, 100% of a mutual fund’s face value may be considered.

Answer 68

Although General Mortgage Knowledge is usually a part of 20-hour pre-licensing education, it is actually a part of the 12 hours of electives and therefore not mandatory.

Answer 69

information that cannot be secured through a general records search or a Freedom of Information/Privacy Act request. Public personal information is information that may be secured through those means.

Answer 70

If the buyer remits $1,075 for the first year, he is saving $125 monthly over his note rate (1,200 – 1,075). If the buyer remits $1,107 for the second year, he is saving $93 per month during the second year (1,200 – 1,107). When 12 payments of $125 ($1,500) are added to twelve payments of $93 ($1,116) the seller will spend $2,616 to fund the 2-1 buydown.

Answer 71

With a 2/1 buydown, the rate would be 4 percent for the first year and 5 percent for the second year, with monthly payments of $716.12 and $805.23 , respectively. Subtract the two lower monthly payment amounts from the regular monthly mortgage payment calculated at the full rate and multiply each difference times 12.

Answer 72

Unless the borrower confirms receipt prior, if the closing disclosure is issued via US mail or electronically, the three-day precise waiting period must be extended to six in order to account for delivery time. If the closing disclosure was issued on Monday, the sixth precise business days thereafter would be the following Monday. The loan, therefore, would be allowed to close no earlier than the next day (Tuesday).

Answer 73

Although conventional/conforming DTI guidelines are established at 28/36, they are just that … guidelines. With compensating factors, conventional/conforming QM loans may be approved up to a 43% back-end DTI ratio.

Answer 74

The national examination contains 100 multiple choice questions while the UST component adds an additional 25 for a total of 125.

Answer 75

Seven precise business days must elapse after the issuance of the loan estimate before the loan would be allowed to close. The purpose of this mandatory waiting period is to ensure that the applicant has ample time to review the loan’s particulars and carefully contemplate the transaction into which they’re considering entering.

Answer 76

it does not have an enforceable lien.

Answer 77

Let the buyer beware implies that a customer must look out for his or her own interests when entering into a transaction. When the law of agency directs a mortgage professional’s fiduciary responsibility to the customer, the term “caveat emptor” is rendered inapplicable.

Answer 78

15 days prior to a servicing release and by the receiving entity no later than 15 days after the receipt of servicing.

Answer 79

within three precise business days of the receipt of an application.

Answer 80

The USA Patriot Act was enacted as a direct result of the terrorist attacks of September 11, 2001. The primary concerns of the Patriot Act are to thoroughly identify each customer in order to ensure that criminals are prevented from receiving loan proceeds (similar to when an individual attempts to purchase an airline ticket and is compared against the no-fly list) along with ensuring that all money utilized in and as a part of any financial transaction are legitimate and have been legally acquired.

Answer 81

future payment amounts. At the time of the next scheduled interest rate change, the mortgage servicer calculates the new payment amount considering the currently-applicable interest rate, the remaining term, and the existing principal balance. A balance that is lower than it otherwise would be due to the previous remittance of principal pre-payments will cause the new payment to be lower than it would have been had the balance been higher at the time of the interest rate change.

Answer 82

Product steering is a practice through which a lender or loan originator encourages a particular product or price point that rewards the lender or MLO at the expense of the customer’s best interests. To ensure that the customer was duly provided with all appropriate pricing options, the customer should be offered three loan scenarios including the highest rate and lowest costs (above-par pricing to offset settlement costs), par pricing, and the lowest rate with the highest costs (discount points). Ultimately the customer decides with which option to proceed and must qualify for whichever options he or she selects.

Answer 83

first number always represents the LTV of the primary mortgage / The second number represents the LTV of the second mortgage / third number represents the borrower’s down payment. All three numbers must add up to 100% since LTVs + equity must always equal 100%.

Answer 84

unless the amount contained in any one specific retirement account equates to or exceeds 120% of the total amount of cash needed for the down payment and closing costs, the applicant will have to document that the account is theirs, it is vested, it allows for withdrawals regardless of the applicant’s current employment status, and their actual receipt of funds realized from the sale or liquidation of the asset.

Answer 85

payable directly to the customer, jointly to the customer and the contractor, or to a third-party escrow company, agreed upon by all interested parties.

Answer 86

HOEPA was implemented as an attempt to protect individuals from unscrupulous financial predators who might otherwise take advantage of them through predatory lending tactics and practices.

Answer 87

A verbal verification of employment is usually performed within 10 days of the note date. The lender will contact the applicant’s employer to confirm that the applicant is still gainfully employed.

Answer 88

Currently, the four types of QMs are: General, Temporary, Small-Creditor, and Balloon-Payment. Effective January 10, 2014, mortgage lenders are required to demonstrate that they have verified their borrowers’ abilities to repay. The CFPB implemented the Ability to Repay Rule defining all Qualified Mortgages (QMs) as meeting that criteria.

Answer 89

Prior to the Dodd Frank Act, borrowers were regularly approved for mortgage loans that they were incapable of repaying. This, in part, led to the mortgage market collapse of the late 2000’s. Dodd Frank ensures that, through its Ability to Repay rule, all mortgage recipients have clearly demonstrated their ability to repay their loan. Positively identifying one’s customer is a requirement established through the USA Patriot Act. Ensuring that a customer’s interest rate is reasonable is governed through TILA.

Answer 90

Seller’s concessions are based upon the purchase price.

Answer 91

FACTA’s primary purposes surround affording consumers easy access to accurate credit information along with the prevention of identity theft. Although consumers do have the right to opt out of information sharing, that right is afforded to them through the Gramm-Leach-Bliley Act. The right to know the identity of the credit reporting agency used to render a credit decision along with the right to receive a free copy of one’s credit report in the event of declined credit is afforded through FCRA.

Answer 92

If the purchase price is $300,000, the loan amount, at 80% LTV, would be $240,000. Points are calculated based on the loan amount and the borrowers paid $3,600 for them. Since one point on this loan amount equates to $2,400 and the borrowers spent $3,600, the $3,600 equates to 1.5 points (3,600/2,400).

Answer 93

A mortgage servicer may, at its sole discretion, affect a recast by recalculating the payment amount of a fixed-rate loan after receiving a principal pre-payment. Doing so retains the original term at the fixed interest rate while lowering the payment amount. Servicers may do this as a courtesy and may also charge a fee to accommodate this request.

Answer 94

The TLTV represents all outstanding encumbrances in relation to a property’s value. When the sum total of the first mortgage ($112,000) and the line of credit amount ($70,000) is divided by the property value (182,000/325,000), the resulting TLTV is 56%.

Answer 95

A purchase loan’s LTV is calculated by dividing the loan’s principal balance by the lesser of the property’s purchase price or appraised value. Even though the home appraised higher than its purchase price, the purchase price will be the basis for calculating the LTV. The homeowner will most likely be unable to access the equity difference for one full year.

Answer 96

A licensed mortgage originator may satisfy their annual eight-hour CE requirement after instructing four hours of approved CE.

Answer 97

Mortgage Call Reports are required quarterly of all lenders. The reports transmit details pertaining to the loans originated by that lender during the previous quarter.

Answer 98

Full replacement coverage protects the lender’s interests and covers the replacement cost of the property in the event of a loss.

Answer 99

Air loans are loan files submitted to lenders for funding whereby everything contained within the file is false, fabricated, and fraudulent. Air loans are an extreme example of fraud for profit.

Answer 100

With the implementation of QM’s through the Dodd-Frank Act, pre-payment penalties are limited to 2% of the outstanding balance during the loan’s first two years, 1% of the loan’s outstanding balance during the third year, and no penalty thereafter.

Answer 101

The 203(k) is the FHA rehabilitation program allowing for the acquisition of a property along with financing needed renovation. It may be used as both a purchase and refinance option.

Answer 102

1) misrepresentation to the consumer or lender, 2) the omission of important and relevant information 3) neglect of fiduciary responsibility to the customer or lender, 4) Intent to defraud

Answer 103

requires that any money resulting from the utilization of above-par pricing gets fully credited to the customer at closing. Prior to this rule, loan originators would often sell higher-than-market interest rates to customers and pocket resulting the “overages.” Because of this rule, that practice that is no longer permitted.

Answer 104

30% causes a potential creditor to question whether or not that individual is living beyond his or her means and utilizing credit responsibly.

Answer 105

Section 35 of TILA addresses the requirements surrounding higher-priced mortgage loans.

Answer 106

Portfolio lending. When a lender lends its own money, it makes its own rules and earns the interest itself. Loans such as these are generally held in “portfolio” and may take a lender a while to achieve its return on investment. Portfolio lenders also usually retain all of the risk.

Answer 107

The “yield spread premium,” or YSP as it’s known in the industry, is the fee (commission) paid by the mortgage lender to the broker in exchange for a higher interest rate, or an above market mortgage rate.

Answer 108

Section 32 of TILA - The Truth-in-Lending Act was amended in 1994 when Section 32 was added enacting the Home Ownership and Equity Protection Act (HOEPA). This regulation was enacted to address and stop predatory lending practices in purchases, refinances, open-ended credit plans, and closed-ended home equity loans that abusively charged excessive points, interest rates, and fees.

Answer 109

The NINA is a “no income/no asset” loan. The NINANE is a “no income/no asset/no employment” loan. The SIVA is a “stated income/verified asset” loan.

Answer 110

The truth-in-Lending Act

Answer 111

The only ratio guideline applicable for VA financing is the 41% back-end ratio. The VA does not consider a housing expense ratio when analyzing an applicant’s ability to repay.

Answer 112

home equity loan

Answer 113

is a closed-ended fixed-rate

Answer 114

(HELOC) is an open-ended, adjustable-rate financial vehicle.

Answer 115

offer financing on unique property types or for individuals with unique borrowing needs. They are generally retained in portfolio and not sold into the secondary market.

Answer 116

frequency of change, index, margin, and caps.

Answer 117

Consumer Handbook on Adjustable Rate Mortgages (CHARM) - TILA requires that a Consumer Handbook on Adjustable Rate Mortgages (CHARM) be issued within three days of an application for a closed-ended ARM.

Answer 118

Although it is never required, owner’s title insurance is always recommended since it protects the homeowner’s ownership interests in the property.

Answer 119

The E-Sign Act requires that all consumers be made aware of the technical requirements necessary for the utilization of electronic records prior to making the decision as to whether or not they wish to utilize that modality.

Answer 120

$25,000. Each violation or failure to comply with any directive or order of the Commissioner is a separate and distinct violation or failure.

Answer 121

1.5% or more for loans secured by a first lien with a principal obligation that does not constitute jumbo financing

Answer 122

2.5% or more for loans secured by a first lien with a principal obligation that constitutes jumbo financing

Answer 123

3.5% or more for loans secured by subordinate liens.

Answer 124

Average Prime Offer Rate

Answer 125

an escrow account managing the homeowner’s insurance and real estate taxes becomes mandatory for the first five years. Additionally, a written appraisal with an interior inspection is required. Higher-priced mortgages are permitted as long as the above-referenced conditions apply. Lastly, there is no change to the standard right of rescission requirements.

Answer 126

Straw sellers falsely claim ownership to a property for a fee and often appear at closings to act as the legitimate seller.

Answer 127

Asset renting is fraudulently representing ownership of funds to enhance one’s ability to qualify for financing.

Answer 128

no. it is only required for purchase-money transactions

Answer 129

Schedule B is the section of the title insurance binder on which any and all outstanding liens and encumbrances appear.

Answer 130

the mortgage servicer will purchase a non-underwritten, force-placed insurance policy to protect its interests. Demonstrating constant insurance coverage is a requirement of all mortgages. The investor needs to be assured that its investment is continuously insured against loss. In the event that a borrower fails to maintain continuous insurance coverage or provide continuous evidence of such, the mortgage servicer will purchase a non-underwritten, force-placed insurance policy to protect its interests.

Answer 131

to create strong, sustainable, inclusive communities and quality affordable homes for all. HUD is working to strengthen the housing market to bolster the economy and protect consumers; meet the need for quality affordable rental homes; utilize housing as a platform for improving quality of life; build inclusive and sustainable communities free from discrimination, and transform the way HUD does business.”

Answer 132

The NMLS&R must be informed of any action taken against a licensee.

Answer 133

The Dodd-Frank Act consolidated many various regulatory authorities and centralized oversight of the U.S. financial industry under the Consumer Financial Protection Bureau (CFPB).

Answer 134

VA loans generally limit the periodic rate change to 1% above or below the previous rate and the life-of-loan cap to no more than 5% above the initial interest rate.

Answer 135

to the next highest five-year increment. Mortgage terms typically run between 10 and 30 years in increments of five.

Answer 136

Fraud for profit is when some or all of the professional players orchestrating a fraudulent transaction benefit from the fraud. Although artificially-inflated values are often a component to illegal property flipping, that is not the best possible answer since the question did not indicate how long ago the property was initially acquired.

Answer 137

The COFI is the Cost of Funds Index. The LIBOR is the London Interbank Offered Rate. The COSI is the Cost of Savings Index.

Answer 138

the household’s size and the location of the property.

Answer 139

Although Lucy is at 78% LTV, she will not be released of her obligation to pay PMI until she either becomes current or reaches her loan’s amortization midpoint.

Answer 140

The National Housing Act, establishing the FHA, was one of the federal government’s responses to improve conditions resulting from the Great Depression.

Answer 141

consist of disclosing the cost of the credit to the customer, establishing the right of rescission applicable to non-purchase, primary residential transactions, and overseeing advertising.

Answer 142

fine of up to $10,000

Answer 143

52 weeks and 26

Answer 144

the moment that a customer accepts the assistance of a mortgage professional as the moment when that mortgage professional has a fiduciary responsibility towards that customer.

Answer 145

loans made with funds insured by the federal government, loans made with funds from a lender regulated by the federal government, loans that are intended for sale to Fannie Mae or Freddie Mac, loans made by a creditor regulated under the Truth-in-Lending Act, and loan transactions involving federally related mortgage loans. Loans that are exempt from RESPA coverage consist of loans for 25 acres or more, loans for business, commercial, or agricultural purposes, temporary financing (bridge loans), loans secured by vacant land, loan assumptions that are permissible without lender approval (a simple assumption falls within this category), loans sold on the secondary market, and loan conversions when a new note is not required and the provisions are consistent with those of the original mortgage.

Answer 146

$50.00 or more in the form of a credit to the next periodic mortgage payment or via check to the borrower. Although the servicer may opt to refund the $35.00 overage, it isn’t compelled to do anything since overages of less than $50.00 may stay in escrow to be absorbed by future shortages or added to future overages.

Answer 147

FHA loan limits vary by geographic location, specifically, the county in which the property is located. FHA loan limits may be ascertained at https://entp.hud.gov/idapp/html/hicostlook.cfm.

Answer 148

the extension of credit to individuals for personal, family, or household purposes when the borrower’s dwelling secures the debt. TILA does not regulate loans applicable to business, agricultural, or organizational credit, credit in excess of $25,000 that is not secured by real property or a dwelling, public utility credit, credit extended by a broker registered with the Securities and Exchange Commission or the Commodity Futures Trading Commission, home fuel budget plans, and student loans.

Answer 149

A court order or other legal obligation must be established in order for an individual to have child support considered as qualifying income. The most recent six months’ worth of receipt must be documented along with evidence of continuance for a minimum of 36 additional months.

Answer 150

initial adjustment, periodic, life-of-loan, and payment.

Questions Flashcards

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