Safe Practice Exam 1 A Flashcards
What is a provision in a mortgage enabling the lender to demand full repayment if the borrower sells the mortgaged property or partial interest in a mortgaged property?
An alienation clause requires the mortgagor to repay the entire balance of the loan if the property is sold, transferred, or otherwise abandoned.
According to ECOA, a borrower can request a copy of the appraisal report used in the decision process__days of a credit decision.
Borrowers have a right to request a copy of the appraisal report used for a decision within a 90 days of that credit decision.
A customer asks for his mortgage broker for the name of a good title company. The broker has a list of several companies with whom she has done business in the past. At what point, according to RESPA, must she give the customer an AfBA disclouse?
If the referring party does not have an ownership or other beneficial interest, an Afficilated Business Arrangement (AfBA) disclosure is not required by RESPA.
What would not be considered a RESPA violation?
A thing of minimal valued used in the course of sales such as pens, mementos, coffee cups hats, etc. is permissible, but the other three arrangements could be considered violations of RESPA. To violate RESPA, the thing of value does not have to be money.
The Real Estate Settlement Procedures Act (RESPA) is also known as
RESPA is also known as Regulation X.
What is the least acceptable factor in evaluation a mortgage loan application?
Creditors may not deny a loan based on the source of income; they may deny a loan based on the likeliness that the income will continue.
Which regulation encourages financial institutions to help meet the credit needs of their communities, including low- and moderate-income neighborhoods, consistent with safe and sound lending practices?
The Community Reinvestment Act is intended to ensure that all neighborhoods are served by financial institutions.
According to ECOA, a borrower can request a copy of the appraisal report used in the decision process with __ days of a credit decision.
Borrowers have a right to request a copy of the appraisal report used for a decision within 90 days of that credit decision.
Conforming loans follow the underwriting guidelines of
Traditionally, a loan is considered to be conforming when it meets Fannie Mae/Freddie Mac standards and can be sold on the secondary market.
ECOA is a low that ensures
The Equal Credit Opportunity Act ensures all lenders must make credit available with fairness and without discrimination.
A 65 year old homeowner does not currently have a mortgage on his home but is inn need of funds to make some repairs. Which mortgage option would best address his needs?
A reverse mortgage allows qualified homeowners at least 62 years of age to convert equity in their home into a monthly income stream or line of credit.
The borrower knows that his credit is bad, but he really wants to buy a house. He convinces his cousin to apply for a loan, knowing she will be able to get better terms. He promises her that he will pay the full mortgage amount every month. She could be considered a
A buyer who has no intention of living in the property he or she fraudulently mortgages could be considered a straw buyer. While this situation may seem okay, since it’s just one relative helping out another, it’s still misrepresentation and, therefore, fraud.
An FHA borrower may
FHA loans are not just for low-income borrowers. They can be used to purchase a one- to four family residence. FHA loans do require a down payment but allow borrowers to use a give to cover that.
The value remaining in property after all liens and debt are considered is its
Equity is the difference between market value of a property and the sum of the mortgages and liens against it.
A borrower is refinancing his home and signs the loan papers. How much time does Reg Z give him to change his mind?
When refinancing, Regulation Z gives a borrower three business days to rescind after the contract is signed.
An 80/20 combo loan with the sales price of $175,000, a rate of 6 % for the 80% first mortgage, and a rate of 8.5% for the 20% second mortgage would have a first mortgage loan amount of what?
The first mortgage is 80% of the sale price: $175,000 x 80%= $140,000.
A convertible ARM allows a borrower to change
A convertible adjustable rate mortgage gives a borrower the right to change from an adjustable rate mortgage to a fix rate mortgage one time during the loan term, provided certain conditions are met.
The act of redlining may be defined as
Redlining is the refusal to make loans on property in certain neighborhoods for discriminatory reasons and is an illegal discriminatory act under federal, state, and local fair housing laws.
A borrower wants to get a loan to buy a house. When evaluating his credit obligations, which would not be considered as debit?
His cable service part of his debt for qualifying purpose since cable service can be cancelled.
HOEPA is an addendum to what law?
HOEPA is an addendum to the Truth and Lending Act. HOEPA limits the amount of points that can be charged on loans without additional disclosures.
The relationship between the cost of borrowing and the total amount financed, represented as a percentage, is known as
The APR-annual percentage rate-takes into consideration the cost of borrowing and the total amount financed. It is represented as percentage and is the true cost of lending.
While underwriting a loan file, you calculate this formula
A borrower’s housing expense ratio is the relationship of the borrower’s total monthly housing expense to income, expressed as a percentage.
An opinion of value is also known as
The definition is “an opinion of value.”
TILA requires creditors to maintain records that they complied with the disclosure requirements for how many years?
Tila law requires creditors to maintain records for two years after the disclosure were required to be made.