safe test

Question 1

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

Answer 1

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

Question 2

The functions of participating in the NMLS, conducting background checks, and writing rules and regulations are required under the SAfe Act by

Answer 2

A state licensing agency

Question 3

Under the truth-in-lending Act, a “general” business day is

Answer 3

Any day of the week aside from sunday and federal holidays, on which the entity conducting business is fully operational

Question 4

Caps on arms are put in place why

Answer 4

To limit the amount the interest rate or payment may change

Question 5

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

Answer 5

Close the company down for the period of the examination

Question 6

What can a state licensing agency do when conducting an examination

Answer 6

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

Question 7

A lender will always require that the borrower obtain title insurance because

Answer 7

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

Question 8

What zones are considered high risk flood zones

Answer 8

Zones a and v

Question 9

What zones are considered moderate flood zones

Answer 9

Properties in zones b and x < insurance is optional>

Question 10

What zone is considered low risk flood zone

Answer 10

Zone or x

Question 11

What are the flood insurance minimum and maximum

Answer 11

100,000 is the minimum

250,000 is the maximum

Question 12

What is transitional authority/temporary authority

Answer 12

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

Question 13

How long is an mlo able to operate on a transitional authority

Answer 13

120 days

Question 14

Discount point /buy down

Answer 14

Money paid upfront to get a lower rate. Can be temporary or permanent. The calculation will always be based on the loan amount.

Question 15

What is the formula to calculate the discount points

Answer 15

Discount points=loan amoint x # (%) of points

Question 16

Loan origination points

Answer 16

Money paid to the loan originator for originating the loan.

Question 17

What is the formula to calculate the loan origination points

Answer 17

Origination point= loan amount x # (%) of points

Question 18

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?

Answer 18

3054 total discount points. < loan amount×points=total discount points>

Question 19

The right of rescission applies to

Answer 19

Applies to any credit transaction involving the establishment of a security interest in a principal residence

Question 20

The right to rescission does not apply to

Answer 20

Purchase loans, construction loans/commercial loans, loans on vacation or second homes

Once they sign then they own

Question 21

Tila allows borrowers to have the right to do what

Answer 21

Tila allows borrowers the right to CANCEL certain credit transactions

Question 22

What does rescind mean

Answer 22

Rescind means to take back or withdraw an offer or contract

Question 23

How do creditors inform consumers of their right to rescind?

Answer 23

Creditors must provide two copies of a notice of right to rescind document to each consumer entitled rescind

Question 24

What happens when a borrower rescinds

Answer 24

The borrower is entitled to a full refund of any funds must be provided to escrow within 20 days.

Question 25

Is the day of signing included in the 3 day rescission period

Answer 25

False. The first day is after they sign.

Question 26

What days are included and not included in the rescission period

Answer 26

Saturdays are included in the rescission period

Sundays and federal holidays are not included in the 3 business day calculation

Question 27

What is true of fha fixed rate loans

Answer 27

Theyre available in 25 and 30 year terms

They require upfront mip on all loans

borrower must make at least a 3.5% investment

Question 28

What is a purpose of the HERA

Answer 28

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

Question 29

Ecoa prohibits what

Answer 29

discouraging anyone from applying from a mortgage

Question 30

Can you ask an applicant about their race, national origin, and sex?

Answer 30

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

Question 31

What is the model state law

Answer 31

A document created by the csbs and the aarmr to guide states in implementing the legislation required by the SAFE Act.

Question 32

At what LTV is a mortgage servicder required to remove pmi on a “high-risk” loan, assuming the borrower’s loan is current

Answer 32

77%

Question 33

Payment shock is defined as

Answer 33

The difference between the borrower;s currect housing expense and the proposed housing expense through the loan they’re considering

Question 34

The statement on subprime lending defines an individual as a credit risk if

Answer 34

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

Question 35

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?

Answer 35

2,500.00

biweekly pay*26=annual income

annual income/12=monthly income

Question 36

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?

Answer 36

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.

Question 37

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

Answer 37

Piggyback financing

Question 38

What is piggyback financing

Answer 38

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.

Question 39

An application fee is not included in the APR as long as

Answer 39

It is assessed to all applicants

Question 40

what is used to calculate an applicant’s income

Answer 40

Bank statements

Pay stubs

w2 forms