Review Flashcards
1
Q
What does S.A.F.E stand for ?
A
Secure And Fair Enforcement for Mortgage Licensing Act of 2008
2
Q
What type of MLO must be licensed?
A
An MLO of a non-depository firm that arranges mortgages for clients
3
Q
What do mortgage loan lenders and mortgage brokers do with loans ?
A
Mortgage lenders make loans and Mortgage brokers arrange loans .
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 )
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
6
Q
Which of the following would be grounds for denying a license?
A
convicted for breach of trust within prior 15 years
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
8
Q
NMLS was created and is owned by the SRR : what does SRR stand for?
A
State Regulatory Registry
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
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
11
Q
What is an MLO?
A
An MLO is someone who takes mortgage applications or negotiates rates and terms with borrowers.
12
Q
What does FHA stand for ? and what division is it apart of?
A
Federal Housing Administration - its a division of HUD
13
Q
What Does HUD stand for ?
A
US Department of Housing and Urban Development
14
Q
What does GSE Stand for ?
A
GSE - Government Sponsored Enterprise:
15
Q
What is apart of a GSE
A
FNMA - Federal National Mortgage Association
FHLMC - Federal Home Loan Mortgage Corporation
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
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.
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.)
19
Q
the secondary market is made up of what entities?
A
the entities that insure, guarantee and purchase the mortgages
20
Q
FNMA/FHLMC ______ loans. Fill in the blank
A
Purchases
21
Q
FHA ____ Loans. Fill in the blank
A
Insures
22
Q
VA and USDA ____ Loans Fill in the blank.
A
Guarantees
23
Q
What is the purpose of GNMA?
A
GNMA - Government National Mortgage Association - Buy all the Government loans - FHA, VA, USDA
24
Q
What is a MBS ( Mortgage Backed Securities )
A
are a product of the secondary market
25
What is an encumbrance?
- a claim against a property that is held by someone who is not the legal owner.
26
In a Title State, the lending institution holds title to the property in the name of the borrower through what ?
Deed of Trust.
27
What is involved in a Hard Prepayment Penalty?
set time frame, the property if sold or refinanced during this time frame, would allow the lender to charge a set penalty
28
What can you do during a soft Prepayment Penalty?
cannot refinance without penalty but you may sell.
29
What takes priority over any lien?
Taxes
30
Why are Jumbo Loans considered non-conforming loans ?
because they exceed the FNMA Loan limit of $417,000
31
What are the Aspects of an FHA (federal housing administration loan?
- 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
32
How long does MIP stay on an FHA loan that is greater than 90%LTV
MIP is now Lifetime ... Loans at 90% LTV and under - MIP stays on for 11 years ***
33
What is the Max Origination fee a lender can charge a veteran on VA loan ?
1%
34
What are the Aspects of an VA(Veteran Affairs) loan??
- 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.
35
What are the late fees for a VA loan ?
4% of the princ and int payment.
36
What are the Aspects of anUSDA( US department of agriculture) loan??
>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%
37
What do the numbers mean in this statement 2/28 6 month LIBOR (index)?
(2) Represents numbers of years fixed
(28) Represents the number of years Adjustable
( 6) tells you it adjust every 6 months ( based on libor)
38
What do the numbers mean in this statement 5/1 ARM)
(5) is number of years fixed
| (1) Adjusts annually
39
For Caps what does the numbers mean in this statement : 2/6?
(2) Represents how much the loan can adjust in any adj period
(6) Represents how much the loan may adjust over its life ( max)
40
For Caps what does the numbers mean in this statement : 2/1/6?
(2) Represents the first adjustment max
(1) Represents all other adjustment periods
(6) max adjustment over term of loan
41
What does LIBOR stand for?
London Interbank Offered Rate
42
What does COFI stand for?
Cost of Funds Index
43
What are the different aspects of a HECM (Home Equity Conversion Mortgage)?
> 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
44
What are the three ways to get your money for a HECM?
1. ) Lump Sum
2. ) Monthly
3. ) Home Equity Line of Credit ( HELOC)
45
What is the borrower of a HECM loan required to pay?
HOA and Real Estate Taxes (and Insurance)
46
A Construction loan requires payment of:
Interest only
47
What type of loan has a rate of 5% for 5 years and a rate at 6% for the remaining 25 years?
Variable Rate
48
What type of loan cannot be required to be repurchased?
NO- Bid Loan
49
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?
Bridge Loan
50
Who does Homeowners/Hazard Insurance protect?
Lenders and Borrowers
51
PMI (Private Mortgage Insurance) protects who ?
Lender
52
Private Mortgage Insurance are Required on Conforming loans that are over what percentage in LTV?
80 %
53
What is a Owners Policy?
Property vested free and clear of all defects
54
What is a Lenders Policy?
this one follows the loan if its sold in the secondary market
55
This allows a lender to determine if there are liens or judgments on a property:
Title search
56
When is a chain of title used ?
to determine if the home has been subject to property flipping
57
who creates a FIRM– Flood Insurance Rate Maps?
FEMA(Federal Emergency Management Agency)
58
What amount does Flood Insurance Cover?
100% of dwelling
59
You may refer to the borrower as all of the following except?
> Married
> Separated
> Divorced **** also cannot say single or widowed
> Unmarried
> Divorced **** also cannot say single or widowed
60
What information is collected in the assets and liability section ?
Name of creditor/ monthly payment/ unpaid balance
61
What is the significance of having the MLO sign the last page of the 1003?
> attest to the truthfulness of the document ( borrower attests)
> express how the application was taken and who the MLO is employed by
62
Where should an MLO Place their NMLS unique Identifier ?
on all applications and all documents you provide to borrowers to include advertisements, this includes business cards
63
What section of the URLA would you collect Government Monitoring Information ?
Section 10 (X
64
If a borrower chooses not to provide the Gov't monitoring answers, what is the MLO's responsibility?
If application was taken 'face to face' then the MLO must write the words “Visual Observation" above their declination to answer and guess.
65
What are the different ways to take and application?
Face to face
Internet/ email
Mail/Fax
Telephone
66
What report are Appraisal done on ?
URAR - Uniform Residential Appraisal Report
67
What are the different types of Appraisals for determining value?
.) 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
3 total adjustments that are made on appraisals, the maximum for each is
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
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
description of improvements to property
70
CRA's - Credit Reporting Agencies supply the reports - there are 3 repositories
1. ) Experian
2. ) Trans Union
3. ) Equifax
71
What are the types of Credit Reports?
1. ) In file report - one repository
2. ) tri merged - all three repositories on one report **** most popular
3. ) factual data report ( RMCR
1. In file credit report: A report that is received directly from one (1) of the national credit a bureau that is not verified.
2. Tri-merge credit report: A report that is obtained from a credit reporting agency and contains data collected from all three (3) national repositories.
3. 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
All of the following would be found in a credit report except?
a. ) Judgments
b. ) Collections
c. ) tax liens / foreclosures
d. ) utility records
utility records
73
How long does chapter 11 Bankruptcy stay on a credit report?
10 years
74
What must have a two years history to be counted as income?
Part Time/ Overtime/ Bonuses/ Commissions/ Self employment/ Rental Income
75
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
Intermittent or seasonal income
76
What is a Pre qualification?
more of an opinion based on info
77
What is a Pre Approval ?
is a formal process based on documented info
78
What is a Commitment ?
written notification from a lender states the terms of the loan
79
A telemarketer can be fined how much for calling someone registered on the National Do Not Call Registry?
16,000
80
A bridge mortgage is described as a
A mortgage that occurs between the termination of one mortgage and the begining of the next
81
Which gets paid first - place in order - interest, princ ,past due?
? Past Due, Interest, princ
82
Housing Ratio aka Front End includes :
- Principal Interest Taxes and Insurance ( includes mortgage or flood ins) and HOA
dues - PITI
83
Debt Ratio-- The Back End includes
includes all installment debt, cars, student loans, revolving debt and includes the housing Ratio and all other debts
84
What is LTV (Loan To Value)?
What is outstanding verses what its worth ( 1st mortgage)
85
What is CLTV (Combined Loan To Value)?
add all mortgage balances and divide into value
86
When dealing with purchases you must use the purchase price or the appriased value?
Which ever is less
87
How do you compute Loan to Value?
loan amount divided the lesser value of the appraised value or mortgage value
88
Buy down Mortgage and a Graduated Payment Mortgage are examples of what ?
Fixed rate loan
89
What is Daily interest or interest per Diem calculated by?
360 days
90
What is the 3/7/3 rule consist of?
>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
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.
APR - Annual Percentage Rate
92
each owner gets how many copies of the right to rescind notice and how many copies of the disclosure?
2 Copies of The right to rescind and 1 copy of the disclosure
93
how long to keep TILA documents after you disclose?
2 years
94
If you create a high cost mortgage you must comply with the following rules:
http://www.free-tv-video-online.info/player/mooshare.php?id=ymur2bzjv3xc
95
what Points and Fee’s Trigger makes a loan high cost
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
What are the APR triggers for a high cost loan?
– 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
‘Higher Priced Mortgage Loans’ is a loan has an APR that exceeds
the APOR by 1.5% on a 1st mortgage 2.5%
| on Jumbos and 3.5 on junior mortgages
98
(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 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
what are the criteria to be exempted from the (TILA HPM escrow rule)
-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
Appraisals for higher priced loans must be provided to borrowers how many days before closing?
3days
101
What are the three primary purposes for RESPA
> Educate borrowers on costs associated with loan (provide GFE)
> Eliminates kickbacks and referral fee’s (section 8)
> Establishes rules for escrow
102
All borrowers who apply for a federally related mortgage must be given a written list of what 3 days after filing an application?
written list of 10 HUD approved homeownership counseling organizations in their area
103
Settlement Cost Information Booklet must be given to who and when ?
> Provide to Purchase Applicants Only
| > Within 3 business days of application
104
For a GFE You must guarantee your closing costs to the borrower for how long?
10 days
105
On a GFE what can change?
You must guarantee your closing costs to the borrower
106
On a GFE what can change by only 10 %?
> Required services the lender selects
> Title services (lenders and owners policy)
> recording Fee's
107
On a GFE what can't change?
( Lender and broker fee's)
> Origination charges
> Points ( after the loan is locked)
108
What Uniform Settlement Statement commonly known as?
HUD 1
109
What does the Uniform Settlement Statement commonly known as the Hud 1 do?
This document clearly itemizes all of the closing costs in the transaction and is used at closing.
110
Uniform Settlement Statement commonly known as the Hud 1 the borrower has a right to preview this document how many days prior to close ?`
1 day
111
What section of RESPA prohibits anyone from giving or accepting anything of value for the referral of a mortgage loan or settlement services.
Section 8
112
Under RESPA a referrer can receive compensation only if:
When provider is an "associate" as defined by RESPA
113
What is the penalty of section 8?
10,000 fine and /or 1 year in prison or both.
114
How long does RESPA requires that you maintain the Servicing Disclosure, HUD 1 and ABA disclosure ?
min of 5 years
115
Handicap is under which set of laws
Fair Housing/Lending
116
When is it okay to ask someone their religion?
Never
117
At application the MLO notices the borrower is pregnant; they should:
Ignore that the applicant is pregnant
118
In an adverse action letter if denied for credit - the lender must supply the borrower with what ?
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
