safe test Flashcards
When all of the Dodd-Frank Act amendments to HOEPA take effect, which of the following loans will be covered under HOEPAS high cost loan provisions
A conventional refinance loan on a primary residence.
A conventional purchase loan on a primary residence
A home equity line of credit on a primary residence
The functions of participating in the NMLS, conducting background checks, and writing rules and regulations are required under the SAfe Act by
A state licensing agency
Under the truth-in-lending Act, a “general” business day is
Any day of the week aside from sunday and federal holidays, on which the entity conducting business is fully operational
Caps on arms are put in place why
To limit the amount the interest rate or payment may change
A state licensing agency is conducting an examination of a company;s loan origination activities. In doing so, it may do all of the following except
Close the company down for the period of the examination
What can a state licensing agency do when conducting an examination
Require the company to compile reports related to their mortgage loan transactions
subpoena books and records
control access to the company’s books and records
A lender will always require that the borrower obtain title insurance because
A lenders title policy issued following an extensive title search constitutes reasonable assurance that title is clear and any losses from claims on title will be reimbursed
What zones are considered high risk flood zones
Zones a and v
What zones are considered moderate flood zones
Properties in zones b and x < insurance is optional>
What zone is considered low risk flood zone
Zone or x
What are the flood insurance minimum and maximum
100,000 is the minimum
250,000 is the maximum
What is transitional authority/temporary authority
People who are allowed to originate loans while completing any state-specific requirements for licensure such as education or testing for up to 120 days while they are applying to the state agency for their new license
How long is an mlo able to operate on a transitional authority
120 days
Discount point /buy down
Money paid upfront to get a lower rate. Can be temporary or permanent. The calculation will always be based on the loan amount.
What is the formula to calculate the discount points
Discount points=loan amoint x # (%) of points
Loan origination points
Money paid to the loan originator for originating the loan.
What is the formula to calculate the loan origination points
Origination point= loan amount x # (%) of points
If a property has a sale price of 197,000 and appraised value of 196,000 with a loan amount of 152,700 and a cost of two points, what is the cost of the buydown?
3054 total discount points. < loan amount×points=total discount points>
The right of rescission applies to
Applies to any credit transaction involving the establishment of a security interest in a principal residence
The right to rescission does not apply to
Purchase loans, construction loans/commercial loans, loans on vacation or second homes
Once they sign then they own
Tila allows borrowers to have the right to do what
Tila allows borrowers the right to CANCEL certain credit transactions
What does rescind mean
Rescind means to take back or withdraw an offer or contract
How do creditors inform consumers of their right to rescind?
Creditors must provide two copies of a notice of right to rescind document to each consumer entitled rescind
What happens when a borrower rescinds
The borrower is entitled to a full refund of any funds must be provided to escrow within 20 days.
Is the day of signing included in the 3 day rescission period
False. The first day is after they sign.
What days are included and not included in the rescission period
Saturdays are included in the rescission period
Sundays and federal holidays are not included in the 3 business day calculation
What is true of fha fixed rate loans
Theyre available in 25 and 30 year terms
They require upfront mip on all loans
borrower must make at least a 3.5% investment
What is a purpose of the HERA
Establishing the NMLSR
title five of the housing and economic recovery act establishes the SAFE act. one of the components of safe is to establish the nationwide mortgage licensing system and registry (NMLSR), a national system for regulating and monitoring mortgage professionals
Ecoa prohibits what
discouraging anyone from applying from a mortgage
Can you ask an applicant about their race, national origin, and sex?
Yes, it is required under hmda and therefore allowable under ecoa and establishing an across the board policy whereby a lender refuses to lend to anyone at or below a certain credit score threshold
What is the model state law
A document created by the csbs and the aarmr to guide states in implementing the legislation required by the SAFE Act.
At what LTV is a mortgage servicder required to remove pmi on a “high-risk” loan, assuming the borrower’s loan is current
77%
Payment shock is defined as
The difference between the borrower;s currect housing expense and the proposed housing expense through the loan they’re considering
The statement on subprime lending defines an individual as a credit risk if
Their credit history reflects 2 or more 30 day delinquencies within the prior 12 month period
one or more 60 day delinquencies within the prior 24 months
foreclosure
repossession
charge off within thein the prior 24 months
bankruptcy within the previous 5 years
credit score representing a high risk of default
debt-to-income ratio of 50% or higher
Sue johnson is a receptionist for a construction company. she receives bi weekly pay in the amount of 1,153.85. what is her monthly qualifying income?
2,500.00
biweekly pay*26=annual income
annual income/12=monthly income
a mortgage originator sends a thank you note to a realtor for referring a client. who, if anyone, violated respa?
the realtor
the mortgage originator
both the realtor and the mortgage originator
neither the realtor noe the mortgage originator
why?
Neither the realtor nor the mortgage originator since nothing of value was exchanged between the referral sources, no violation occurred. The thank-you note did not constitute a thing of value because it did not possess a tangible use.
Placing a subordinate loan behind a conventional first mortgage to eliminate the need for PMI when the applicant has less than 20% to put down on a home purchase is known as
Piggyback financing
What is piggyback financing
Piggyback financing involves an applicant applying for a first mortgage at 80% LTV as well as a secondary loan for the difference between the 80% first mortgage and their down payment. By limiting the first mortgage to 80%, the lender would not require PMI. a common example is an 80/10/10 which involves an 80% firdt mortgage a 10% second mortgage and a 10% down payment.
An application fee is not included in the APR as long as
It is assessed to all applicants
what is used to calculate an applicant’s income
Bank statements
Pay stubs
w2 forms
