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Real Estate Agent (SAE & CE) Study Guides > RMLO > Flashcards

RMLO Flashcards

1
Q

Primary Mortgage Market

A

Creditor to Consumer

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2
Q

Secondary Mortgage Market

A

Investors buying loans from creditors

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3
Q

Federal National Mortgage Association (FNMA)

A

FANNIE MAE

Begin in 1938 and is privately owned.

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4
Q

Federal Home Loan Mortgage Corporation (FHLMC)

A

FREDDIE MAC

Established in 1970, and is Privately owned

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5
Q

Government National Mortgage Association (GNMA)

A

GINNIE MAE

Established in 1968 and is Government owned

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6
Q

American Association of Residential Mortgage Regulators (AARMR)

A

AARMR is the National Association of executives of the various states charged with the responsibility for administration and regulation of RESIDENTIAL mortgage lending, servicing and brokering.

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7
Q

Nontraditional Mortgage Product

A

Means any mortgage product other than a 30-year fixed mortgage.

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8
Q

Secure and Fair Enforcement for Mortgage Licensing Act of 2008 (SAFE Act)

A

The SAFE Act’s Licensing and registration standards for mortgage loan originators are MINIMUM standards.

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9
Q

Federal Registration of Residential Mortgage Loan Originators (Regulation G)

A

States that employees of FEDERAL depository institutions regulated by the following federal banking agencies MUST be registered, but DO NOT have to be licensed.

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10
Q

SAFE Act: Regulation H

A

All NON federally insured depository institution mortgage loan originators without exception, must be state licensed and federally registered.

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11
Q

Regulation H Minimum Annual Requirements

A

All state licensed mortgage loan originators MUST satisfy annual continuing education requirements which must include at least 8 HOURS of education approved by the NMLSR.

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12
Q

Unique Identifier Shown

A

The unique identifier need NOT be shown on INTEROFFICE communications.

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13
Q

Uniform Residential Loan Application (URLA)
Form 1003

A

The official application form for all residential loans and is the central document of the residential loan process.

Designed by Fannie and Freddie, gathers all crucial information about the prospect borrower that the lender needs to evaluate the applicant’s creditworthiness.

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14
Q

Income Indicator Models

Regular, Recurring, Received in Cash, and Reasonable

A

Employment and income that meet the requirements of the 4 R’s are considered stable and reliable for qualification process.

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15
Q

Continuity of Income

A

A key driver of successful homeownership is the confidence that all income used in qualifying the borrower will continue to be received by the borrower for the foreseeable future.

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16
Q

Sole Proprietorship

A

Is an UNINCORPORATED business that is individually owned and managed.

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17
Q

Non Liquid Assets (Hard assets and Net Worth)

A

Are assets or possessions that CANNOT be converted into cash quickly. Example is REAL ESTATE.

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18
Q

Financing Concessions that are paid on borrower’s behalf are:

A

Financial contributions from interested parties that provide a benefit to the borrower in the financial transaction;

Payments or credits related to acquiring the property; and

Payments or credits for financing terms, including Prepaid’s.

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19
Q

Credit reports provide information from public records such as:

A

Collections, Repossessions, Foreclosures, and Bankruptcies.

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20
Q

The 3 C’S of mortgage Underwriting

A
  1. Credit Reputation
  2. Capacity
  3. Collateral
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21
Q

Loan to Value (LTV) is the first factor in the loan transaction

A

LTV describes how much of the property’s value is being borrowed. LTV is defined as the ratio of the amount borrowed to appraised value or sales price of the real property expressed as a percentage (%)

The LTV is calculated by dividing the amount of the loan by the lower of the appraised value or the sales price.

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22
Q

Housing Expense to Income Ratio (1st Ratio or Front End)

A

Equals TOTAL monthly

  1. Housing expense
  2. Principal
  3. Interest
  4. Taxes
  5. Insurance

** Includes Homeowners Insurance/Private Mortgage Insurance/Flood Insurance DIVIDED by the qualifying monthly income.

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23
Q

Private Mortgage Insurance (Default Insurance)

A

PMI is insurance that protects lenders from foreclosure losses on low down payment loans. As a result, PMI helps families buy homes with minimum cash out of pocket, making the American dream of homeownership attainable sooner than otherwise possible.

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24
Q

Points and Rate Sheet

A

1 point = 1% of the loan amount

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25
Q

Rate Sheets

A

Residential loan originators receive rate sheets every day. Rate sheets are spreadsheets of interest rates and points offered by a lender.

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26
Q

Conventional Conforming Loans (Non Government)

A

Is a conventional loan that confirms to the regulations created by Fannie Mae and Freddie Mac.

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27
Q

Conventional Loans can be further broken down into:

A

Conforming or Non Conforming categories

28
Q

Department of Housing and Urban Development (HUD)

A

Since 1965, HUD has been the federal agency responsible for issuing the rules that regulate FHA insured loans.

29
Q

FHA’s Direct Endorsement (DE)

A

Under the DE program, approved lenders may underwrite and close mortgage loans without FHA’s prior review and approval.

30
Q

Interested Third Party Contributions

A

The seller and or third party may contribute up to 6% of the lesser of the property’s sales price or the appraised value toward the buyer’s closing costs, prepaid expenses, discounts points, ad other financing concessions.

31
Q

FHA will NOT insure Single Family Mortgages secured by:

A

Vacation Homes

32
Q

FHA Reverse Mortgage

A

The Home Equity Conversion Mortgage (HECM) is the FHA’s reverse mortgage program that enables consumers to withdraw some of the equity in their homes.

Reverse mortgages are not like traditional and home equity loans that require the borrower to make regular payments until debt is settled.

A Reverse Mortgage gives the Senior borrower money from the equity in their home in the form of a loan that is not paid back until the borrowers:

  1. Dies
  2. Conveys title to the property
  3. Other than death, fails to physically occupy the property for a period longer than 12 consecutive months
  4. The borrower fails to perform some obligation under the loan terms, such as keeping the property maintained in good repair, insured, and free of tax liens.

**Borrower MUST be 62 years of age or older

33
Q

United States Department of Veterans Affairs (VA)

A

VA’s guaranty on the loan protects the lender against loss if the payments are not made and is intended to encourage lenders to offer veterans loans with more favorable terms.

** The VA does not loan money, but it does back loans made by private lenders to qualified veterans.

34
Q

VA’s Certificate of Eligibility

A

A COE is a document issued by the Veteran’s Administration to qualified veterans entitling them to VA guaranteed loans.

35
Q

Rural Area Designation

A

RHS programs are available to eligible applicants in rural areas. A rural area is:

  1. Open country which is not part of or associated with an urban area
  2. Any town, village, city, or place, including the immediately adjacent densely set settled area, which is not part of or associated with an urban area which:

a. Has population not in excess of 10,000 if it is rural in character

36
Q

Balloon Loans

A

A balloon payment mortgage is a mortgage that does not fully amortize over the term of the note, thus leaving a balance due at maturity.

The final payment is called a balloon payment because of its large size. Balloon payment mortgages are more common in commercial real estate than in residential real estate.

37
Q

Bi weekly Mortgage Loan

A

A bi weekly is a loan payment plan where borrowers make payments to principal and interest every 14 days rather than once monthly.

38
Q

Non Recourse Loan

A

Nonrecourse debt or loan is secured loan (debt) secured by a pledge of collateral typically real property, but for which the borrower is not personally liable.

39
Q

An Ethical Dilemma is a situation in which individuals:

A

Have difficulty doing what they consider to be RIGHT.

40
Q

Property Flipping

A

Purchasing property at a low price and quickly reselling it for a higher price.

Flipping becomes illegal when it involves an inflated appraisal and mortgage loan that is funded based upon an inflated valuation.

41
Q

Redlining

A

The concept involves the illegal practice of providing unequal access to credit, or unequal terms of credit, on the basis of race, color, national origin, or prohibited characteristics.

42
Q

The Homeowner’s Protection Act

A

The HPA is also known as the PMI cancellation Act.

Consumer’s right to cancel mortgage insurance

43
Q

RESPA Section 8 does permit the following:

A

An employer’s payment to its own employees for referral activities.

44
Q

Forced placed Insurance

A

Also known as creditor placed, lender placed, or collateral protection insurance, is an insurance policy placed by a lender or loan servicer on a home when the property owner’s insurance is cancelled, has lapsed, or is deemed insufficient.

45
Q

Section 8 of the RESPA prohibits any person who,

A

Pursuant to any agreement or understanding gives or receives a fee or a thing of value for the referral of settlement business. (NO KICKBACKS)

46
Q

Annual Percentage Rate (APR)

A

APR is a measure of the cost of credit that lenders must report under Regulation Z. APR is the annual rate charged for borrowing and is expressed as a percentage that represents the actual yearly cost of funds over the term of the loan including certain fees or additional costs associated with the transaction.

47
Q

Collection and report of application or borrower information

A

If the applicant chooses not supply the requested information during a face to face interview, the mortgage loan originator is required to note, on the HMDA form, the race or nation origin and sex of the applicants on the basis of visual observation or surname.

48
Q

Red Flags for FACTA

A

The rule requires that all organizations subject to legislation develop and implement a formal, written, and revisable Identity Theft Program to detect prevent and mitigate Identity Theft.

49
Q

The Do Not Call Implementation Act of 2003

A

Protects consumers from unwanted phone calls from telemarketers. Download every 31 days, over $50K fine if violated.

50
Q

Encumbrances

A

Refer to any charge or claim against a property

51
Q

Re conveyance Deed

A

Is an official document from a mortgage holder releasing the debtor from the mortgage.

52
Q

Deed of Trust

A

Mortgagor= Borrower (2 O’s)

Mortgagee = Lender (2 E’s)

53
Q

Promissory Note

A

Is a legal document that outlines the payment term of a mortgage loan. Promissory means Promise”. The note is the promise to repay the money loaned by the lender.

54
Q

Loan Estimate on Total Interest Percentage (TIP)

A

The amount of interest that you pay over the loan term as a percentage of your loan.

55
Q

A person is required to be licensed under the Texas Finance Code if the person:

A

Engages in the business of Residential mortgage loan origination on real property in the state of Texas.

56
Q

Closing Disclosure Forms are to be kept

A

For 5 years after consummation

57
Q

Persons who had been employed by a bank or depository institution would be granted employment

A

For 1 year and persons for not more than 120 days.

58
Q

Recovery Limits

A

Against a single person licensed is limited to $50,000 until the fund has been reimbursed for the amounts paid. (By Loan originator)

59
Q

Warm Lead

A

Comes from someone who knows or has worked with the salesperson.

60
Q

The Scenario Desk

A

An underwriter or group of underwriters who analyze loan scenarios before loan application is even taken.

61
Q

Seller’s Market

A

Is more challenging to get offers because there are more buyers than Sellers.

62
Q

In a Multiple offer situation:

A

PRE APPROVAL is ESSENTIAL

63
Q

Appraisal Management Company (AMC)

A

Is an independent entity through which mortgage lenders order residential real estate valuation services for properties on which they are considering extending loans to buyers.

64
Q

Sales Comparison Approach

A

The appraiser focuses on resent sales in determining the value of the subject.

The Appraiser will gather at least 3 Comps

The sales comparison approach is used as the BEST indicator of value for existing properties.

65
Q

External Obsolescence

A

Refers to loss in value of a property caused by factors outside the property itself.

Real Estate Agent (SAE & CE) Study Guides (2 decks)

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