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Mortgage Broker 2.0 > Review > Flashcards

Review Flashcards

1
Q

What does S.A.F.E stand for ?

A

Secure And Fair Enforcement for Mortgage Licensing Act of 2008

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2
Q

What type of MLO must be licensed?

A

An MLO of a non-depository firm that arranges mortgages for clients

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3
Q

What do mortgage loan lenders and mortgage brokers do with loans ?

A

Mortgage lenders make loans and Mortgage brokers arrange loans .

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4
Q

Every state at a minimum must:

Have Pre-licensing Education of 20 hours minimum that includes :

A

> 3 hrs Fed Law
3 hrs Ethics/Fraud
2 hrs non traditional Mortgage Products ( The SAFE ACT defines a non traditional mortgage loan as anything other than a 30 year fixed rate loan )

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5
Q

what are the qualifications of Background checks to become an licensed MLO?

A

> No Felony in the last 7 yrs
No Felony EVER if it had to do with fraud, dishonesty, money laundering etc.
MLO’s must show Financial Responsibility
Pass a test - both Federal and any state you choose to originate

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6
Q

Which of the following would be grounds for denying a license?

A

convicted for breach of trust within prior 15 years

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7
Q

How long is the waiting period for a person who seeks to license as an MLO if a prior felony was pardoned?

A

no waiting period

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8
Q

NMLS was created and is owned by the SRR : what does SRR stand for?

A

State Regulatory Registry

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9
Q

State Regulatory Registry (SRR) is and LLC of what organizations?

A

CSBS - Conference of State Bank Supervisors

AARMR - American Association Of Residential Mortgage Regulators

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10
Q

Which of the following would need a mortgage originators license?

a. ) Closing supervisor in mortgage lender operation
b. ) A Processor or UW that works for a bank
c. ) a processor or UW that works directly with a lender as an independent contract employee
d. ) an owner of a Mortgage Company

A

a processor or UW that works directly with a lender as an independent contract employee

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11
Q

What is an MLO?

A

An MLO is someone who takes mortgage applications or negotiates rates and terms with borrowers.

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12
Q

What does FHA stand for ? and what division is it apart of?

A

Federal Housing Administration - its a division of HUD

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13
Q

What Does HUD stand for ?

A

US Department of Housing and Urban Development

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14
Q

What does GSE Stand for ?

A

GSE - Government Sponsored Enterprise:

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15
Q

What is apart of a GSE

A

FNMA - Federal National Mortgage Association

FHLMC - Federal Home Loan Mortgage Corporation

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16
Q

FHLMC - Federal Home Loan Mortgage Corporation was formed to do what purpose ?

A

It was formed to buy loans originated by Savings and Loans

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17
Q

Why was GSE (government sponsored enterprises) created?

A

its is a financial service corporation created by the Congress to enhance the flow of credit to the market to make it more efficient.

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18
Q

What is the main Responsibility of the primary market ?

A

Primary market is where loans are originated ( ie: MLO’s , Brokers, Lenders, Banks, etc.)

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19
Q

the secondary market is made up of what entities?

A

the entities that insure, guarantee and purchase the mortgages

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20
Q

FNMA/FHLMC ______ loans. Fill in the blank

A

Purchases

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21
Q

FHA ____ Loans. Fill in the blank

A

Insures

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22
Q

VA and USDA ____ Loans Fill in the blank.

A

Guarantees

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23
Q

What is the purpose of GNMA?

A

GNMA - Government National Mortgage Association - Buy all the Government loans - FHA, VA, USDA

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24
Q

What is a MBS ( Mortgage Backed Securities )

A

are a product of the secondary market

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25
Q

What is an encumbrance?

A
  • a claim against a property that is held by someone who is not the legal owner.
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26
Q

In a Title State, the lending institution holds title to the property in the name of the borrower through what ?

A

Deed of Trust.

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27
Q

What is involved in a Hard Prepayment Penalty?

A

set time frame, the property if sold or refinanced during this time frame, would allow the lender to charge a set penalty

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28
Q

What can you do during a soft Prepayment Penalty?

A

cannot refinance without penalty but you may sell.

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29
Q

What takes priority over any lien?

A

Taxes

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30
Q

Why are Jumbo Loans considered non-conforming loans ?

A

because they exceed the FNMA Loan limit of $417,000

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31
Q

What are the Aspects of an FHA (federal housing administration loan?

A
  • Government loan product
  • Div of HUD
  • Largest insurer of Mortgage Loans
  • Must be approved to make FHA loans
  • 2 types of Mortgage Insurance that are charged on an FHA loan
    1.) UFMIP - Up Front Mortgage Insurance Premium
    And
    2.) (Annual) Monthly MIP
  • Anyone is eligible for an FHA loan
  • Gift funds can be used to close (also, borrowers own funds and grant money can be used for down payment)
  • sellers can contribute 6% towards closing costs
  • NO Prepayment Penalties
  • Qualifying Ratios are 31%/43%
  • 3.5% down payment
    -LTV up to eighty-five percent (85%) on cash-out refinance
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32
Q

How long does MIP stay on an FHA loan that is greater than 90%LTV

A

MIP is now Lifetime … Loans at 90% LTV and under - MIP stays on for 11 years ***

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33
Q

What is the Max Origination fee a lender can charge a veteran on VA loan ?

A

1%

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34
Q

What are the Aspects of an VA(Veteran Affairs) loan??

A
  • 100% Financing NO minimum investment on behalf of the borrower
  • VA Loans ARE Assumable (assumer does NOT have to be a veteran but does have to meet the lenders guidelines)
  • VA Qualifying Ratio is 41%
  • Only for veterans of armed forces ( active, reserve, national guard)
  • Sellers can contribute up to 4%
  • No Mortgage Insurance!!
  • NOV - Notice of Value ( VA Appraisal )

> Does have an upfront Funding Fee:
Active Duty - 2.15%
Reserve/ Guard 2.4%
any subsequent use is 3.3% regardless of your service status.

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35
Q

What are the late fees for a VA loan ?

A

4% of the princ and int payment.

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36
Q

What are the Aspects of anUSDA( US department of agriculture) loan??

A

> 100% financing
Only offered in rural areas (Towns with a population of 20,000 or less)
USDA are only offered as 30 year fixed rate owner occupied loans
Guarantee fee is 2% - which can be financed in the loan which means the max LTV is 102%

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37
Q

What do the numbers mean in this statement 2/28 6 month LIBOR (index)?

A

(2) Represents numbers of years fixed
(28) Represents the number of years Adjustable
( 6) tells you it adjust every 6 months ( based on libor)

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38
Q

What do the numbers mean in this statement 5/1 ARM)

A

(5) is number of years fixed

(1) Adjusts annually

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39
Q

For Caps what does the numbers mean in this statement : 2/6?

A

(2) Represents how much the loan can adjust in any adj period
(6) Represents how much the loan may adjust over its life ( max)

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40
Q

For Caps what does the numbers mean in this statement : 2/1/6?

A

(2) Represents the first adjustment max
(1) Represents all other adjustment periods
(6) max adjustment over term of loan

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41
Q

What does LIBOR stand for?

A

London Interbank Offered Rate

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42
Q

What does COFI stand for?

A

Cost of Funds Index

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43
Q

What are the different aspects of a HECM (Home Equity Conversion Mortgage)?

A

> Must be 62 yrs or older
LTV is based on your age - the older you are the higher the LTV
NO credit requirements are or income are required to get this loan

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44
Q

What are the three ways to get your money for a HECM?

A
  1. ) Lump Sum
  2. ) Monthly
  3. ) Home Equity Line of Credit ( HELOC)
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45
Q

What is the borrower of a HECM loan required to pay?

A

HOA and Real Estate Taxes (and Insurance)

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46
Q

A Construction loan requires payment of:

A

Interest only

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47
Q

What type of loan has a rate of 5% for 5 years and a rate at 6% for the remaining 25 years?

A

Variable Rate

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48
Q

What type of loan cannot be required to be repurchased?

A

NO- Bid Loan

49
Q

What type of Loan has the following features: LOW LTV cash out, NO payment for 6 - 12 months, accumulates interest and allows you to purchase another home?

A

Bridge Loan

50
Q

Who does Homeowners/Hazard Insurance protect?

A

Lenders and Borrowers

51
Q

PMI (Private Mortgage Insurance) protects who ?

A

Lender

52
Q

Private Mortgage Insurance are Required on Conforming loans that are over what percentage in LTV?

A

80 %

53
Q

What is a Owners Policy?

A

Property vested free and clear of all defects

54
Q

What is a Lenders Policy?

A

this one follows the loan if its sold in the secondary market

55
Q

This allows a lender to determine if there are liens or judgments on a property:

A

Title search

56
Q

When is a chain of title used ?

A

to determine if the home has been subject to property flipping

57
Q

who creates a FIRM– Flood Insurance Rate Maps?

A

FEMA(Federal Emergency Management Agency)

58
Q

What amount does Flood Insurance Cover?

A

100% of dwelling

59
Q

You may refer to the borrower as all of the following except?
> Married
> Separated
> Divorced ** also cannot say single or widowed
> Unmarried

A

> Divorced ** also cannot say single or widowed

60
Q

What information is collected in the assets and liability section ?

A

Name of creditor/ monthly payment/ unpaid balance

61
Q

What is the significance of having the MLO sign the last page of the 1003?

A

> attest to the truthfulness of the document ( borrower attests)
express how the application was taken and who the MLO is employed by

62
Q

Where should an MLO Place their NMLS unique Identifier ?

A

on all applications and all documents you provide to borrowers to include advertisements, this includes business cards

63
Q

What section of the URLA would you collect Government Monitoring Information ?

A

Section 10 (X

64
Q

If a borrower chooses not to provide the Gov’t monitoring answers, what is the MLO’s responsibility?

A

If application was taken ‘face to face’ then the MLO must write the words “Visual Observation” above their declination to answer and guess.

65
Q

What are the different ways to take and application?

A

Face to face
Internet/ email
Mail/Fax
Telephone

66
Q

What report are Appraisal done on ?

A

URAR - Uniform Residential Appraisal Report

67
Q

What are the different types of Appraisals for determining value?

A

.) Sales Comparison Approach (Most common) aka Market Data/Analysis Approach
2.) Cost Approach - usually used for new construction
3.) Income Approach - typically used for investment or commercial
MLS Approach is not a valid appraisal approach

68
Q

3 total adjustments that are made on appraisals, the maximum for each is

A
  1. ) Gross adjustment max is 25% ( add all adjustments down on the comp and divide into sales price)
  2. ) Net Adjustment max is 15% ( do the math)
  3. ) Single Line Adjustment max is 10%
69
Q

The market conditions addendum required in conjunction with the appraisal report lists all of the following information except?

a. ) number of foreclosure in the market b.) seller concessions
c. ) current inventory of homes for sale
d. ) description of improvements to property

A

description of improvements to property

70
Q

CRA’s - Credit Reporting Agencies supply the reports - there are 3 repositories

A
  1. ) Experian
  2. ) Trans Union
  3. ) Equifax
71
Q

What are the types of Credit Reports?

A
  1. ) In file report - one repository
  2. ) tri merged - all three repositories on one report ** most popular
  3. ) factual data report ( RMCR
  4. In file credit report: A report that is received directly from one (1) of the national credit a bureau that is not verified.
  5. Tri-merge credit report: A report that is obtained from a credit reporting agency and contains data collected from all three (3) national repositories.
  6. Factual data report: A report that is obtained from a credit reporting agency and contains data collected by the agency from two to three (2-3) credit bureaus. The credit agency verifies certain data.
72
Q

All of the following would be found in a credit report except?

a. ) Judgments
b. ) Collections
c. ) tax liens / foreclosures
d. ) utility records

A

utility records

73
Q

How long does chapter 11 Bankruptcy stay on a credit report?

A

10 years

74
Q

What must have a two years history to be counted as income?

A

Part Time/ Overtime/ Bonuses/ Commissions/ Self employment/ Rental Income

75
Q

Which of the following types of income cannot be used or is reason to decline an applicant for a mortgage?
A. Annuity
B Part time income last 24 months
C. Social security and or public income source
D. Intermittent or seasonal income

A

Intermittent or seasonal income

76
Q

What is a Pre qualification?

A

more of an opinion based on info

77
Q

What is a Pre Approval ?

A

is a formal process based on documented info

78
Q

What is a Commitment ?

A

written notification from a lender states the terms of the loan

79
Q

A telemarketer can be fined how much for calling someone registered on the National Do Not Call Registry?

A

16,000

80
Q

A bridge mortgage is described as a

A

A mortgage that occurs between the termination of one mortgage and the begining of the next

81
Q

Which gets paid first - place in order - interest, princ ,past due?

A

? Past Due, Interest, princ

82
Q

Housing Ratio aka Front End includes :

A
  • Principal Interest Taxes and Insurance ( includes mortgage or flood ins) and HOA
    dues - PITI
83
Q

Debt Ratio– The Back End includes

A

includes all installment debt, cars, student loans, revolving debt and includes the housing Ratio and all other debts

84
Q

What is LTV (Loan To Value)?

A

What is outstanding verses what its worth ( 1st mortgage)

85
Q

What is CLTV (Combined Loan To Value)?

A

add all mortgage balances and divide into value

86
Q

When dealing with purchases you must use the purchase price or the appriased value?

A

Which ever is less

87
Q

How do you compute Loan to Value?

A

loan amount divided the lesser value of the appraised value or mortgage value

88
Q

Buy down Mortgage and a Graduated Payment Mortgage are examples of what ?

A

Fixed rate loan

89
Q

What is Daily interest or interest per Diem calculated by?

A

360 days

90
Q

What is the 3/7/3 rule consist of?

A

> give the form within 3 business days after application and only collect the cost of a credit report in 1st three days
wait 7 days to close
if anything changes ( i.e.: APR is off max variance) provide another form and give another 3 days to consider loan.

91
Q

this is the TOTAL cost of the loan after all closing costs are taken into consideration disclosed to the borrower in the form of an interest rate.

A

APR - Annual Percentage Rate

92
Q

each owner gets how many copies of the right to rescind notice and how many copies of the disclosure?

A

2 Copies of The right to rescind and 1 copy of the disclosure

93
Q

how long to keep TILA documents after you disclose?

A

2 years

94
Q

If you create a high cost mortgage you must comply with the following rules:

A

http://www.free-tv-video-online.info/player/mooshare.php?id=ymur2bzjv3xc

95
Q

what Points and Fee’s Trigger makes a loan high cost

A

if the total points and fee’s , not including bonafide 3rd party fees ( i.e. appraisal, credit, inspections)are 5% on loans of $20k or more and 8% or $1,000, whichever is less on loans under $20k.

96
Q

What are the APR triggers for a high cost loan?

A

– if your APR is 6.5% over the APOR – “average prime offer rate” for comparable 1st mortgages and 8.5% over APOR on 2nds or 1st liens under $50k

97
Q

‘Higher Priced Mortgage Loans’ is a loan has an APR that exceeds

A

the APOR by 1.5% on a 1st mortgage 2.5%

on Jumbos and 3.5 on junior mortgages

98
Q

(TILA HPM escrow rule) lenders are required to establish and maintain an escrow account for borrowers who accept a first lien higher priced mortgage loan for how long?

A

a minimum of 5 years. ( or until loan is paid off)

After 5 years the borrower requests it to be canceled, however LTV must be under 80% of the ORIGINAL Value and the borrower cannot be delinquent.

99
Q

what are the criteria to be exempted from the (TILA HPM escrow rule)

A

-Operates predominantly (50% or more) in rural or underserved areas; (underserved means no more than 2
creditors extend 5 or more 1stmortgages in that area)
· together with all affiliates, has total annual mortgage loan originations that do not exceed a limit set by the
Bureau; ( cannot have originated more than 500 1stliens in a year)
· retains its mortgage obligations in portfolio; and
· meets any asset-size threshold and any other criteria as the Bureau may establish. ($2.028billion)

100
Q

Appraisals for higher priced loans must be provided to borrowers how many days before closing?

A

3days

101
Q

What are the three primary purposes for RESPA

A

> Educate borrowers on costs associated with loan (provide GFE)
Eliminates kickbacks and referral fee’s (section 8)
Establishes rules for escrow

102
Q

All borrowers who apply for a federally related mortgage must be given a written list of what 3 days after filing an application?

A

written list of 10 HUD approved homeownership counseling organizations in their area

103
Q

Settlement Cost Information Booklet must be given to who and when ?

A

> Provide to Purchase Applicants Only

> Within 3 business days of application

104
Q

For a GFE You must guarantee your closing costs to the borrower for how long?

A

10 days

105
Q

On a GFE what can change?

A

You must guarantee your closing costs to the borrower

106
Q

On a GFE what can change by only 10 %?

A

> Required services the lender selects
Title services (lenders and owners policy)
recording Fee’s

107
Q

On a GFE what can’t change?

A

( Lender and broker fee’s)
> Origination charges
> Points ( after the loan is locked)

108
Q

What Uniform Settlement Statement commonly known as?

A

HUD 1

109
Q

What does the Uniform Settlement Statement commonly known as the Hud 1 do?

A

This document clearly itemizes all of the closing costs in the transaction and is used at closing.

110
Q

Uniform Settlement Statement commonly known as the Hud 1 the borrower has a right to preview this document how many days prior to close ?`

A

1 day

111
Q

What section of RESPA prohibits anyone from giving or accepting anything of value for the referral of a mortgage loan or settlement services.

A

Section 8

112
Q

Under RESPA a referrer can receive compensation only if:

A

When provider is an “associate” as defined by RESPA

113
Q

What is the penalty of section 8?

A

10,000 fine and /or 1 year in prison or both.

114
Q

How long does RESPA requires that you maintain the Servicing Disclosure, HUD 1 and ABA disclosure ?

A

min of 5 years

115
Q

Handicap is under which set of laws

A

Fair Housing/Lending

116
Q

When is it okay to ask someone their religion?

A

Never

117
Q

At application the MLO notices the borrower is pregnant; they should:

A

Ignore that the applicant is pregnant

118
Q

In an adverse action letter if denied for credit - the lender must supply the borrower with what ?

A

CRA’s name and contact info - as well as alternative credit agencies - Credit score is not required to be disclosed on the denial letter, as it is disclosed upfront

Mortgage Broker 2.0 (2 decks)

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