Section 13 Multiple Choice Flashcards
Under TILA, lenders are required to deliver two copies of what document and one copy of what other document?
[A] Notice of right to rescind; disclosure statement
Disclosure statement; Notice of right to rescind
FAQ; Down payment requirement summary
Down payment requirement summary; Loan detail report
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[Section 13D, Slide 99]
Adam knew there were several factors that go into calculating the TOR percentage for a buyer. Which one of the following would not be used to figure the resulting TOR percentage?
The cost of the mortgage includes the amount required to pay principal, interest, property tax, and property insurance.
If the buyer is being charged a fee for private mortgage insurance, that would be included.
The total debt is then divided by the borrower’s monthly gross income.
[A] The total debt is then divided by the borrower’s yearly net income.
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[Section 13A, Slide 41]
Bailey met with her lender and he informed her that she could do monthly house payments, or she could do biweekly payments. She didn’t really understand why it would be good for her to do biweekly payments instead of monthly. If you were her real estate licensee, what would be your best response?
[A] “By having biweekly mortgage payments instead of monthly mortgage payments, the amount of interest charged drops significantly over the course of the loan. Furthermore, you would actually end up making an extra payment by the end of the year.”
“By having monthly mortgage payments instead of biweekly mortgage payments, your payment would never change, and you would only be responsible for making a payment once a month.”
“By having biweekly mortgage payments instead of monthly mortgage payments, you will end up paying the loan off sooner and have better credit because of it.”
“By having monthly mortgage payments instead of biweekly mortgage payments, you are a reduced risk for the lender and more likely to be accepted for the loan.”
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[Section 13B, Slide 18]
Darin is a real estate broker with ABZ Brokerage, who was responsible for looking over some advertisement signs to ensure compliance with TILA. Which one of the following phrases used in his advertisement is not a triggering term?
[A] 5% below the standard rate
3% interest rate
Only 42 small payments required
Monthly payments less than $600
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[Section 13D, Slides 90 - 93]
Which one of the following statements is true regarding the Dodd-Frank Act?
The Dodd-Frank Act was passed by Congress in 1984 which established the CFPB.
[A] The TILA-RESPA Integrated Disclosure Rule consolidated consumer protection agencies under CFPB to simplify oversight and compliance.
The timely issuance of a consumer credit report, a loan estimate, and a closing disclosure are now required under TRID.
The CFPB is authorized to issue fines and sentences in relation to violations of the real estate industry.
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[Section 13D, Slide 107]
Bob and Jane took out a mortgage on their first home. They had a monthly total debt obligation of $2250. Their total house payment is $990. They have a gross annual income of $32,000. Calculate their housing expense ratio (round to the nearest %).
[A] 37%
32%
60%
68%
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[Section 13C, Slide 70] $32,000÷12=$2,666.67; $990÷$2,666.67=0.3712454 or 37%
What is the primary function of the SAFE Act?
Requires that each lender must register with the DBPR in order to protect the public.
[A] Creates minimum standards for licensing and registering MLO’s.
Enforce rules and regulations in order to reduce the risk for lenders.
Fulfill requirements from the state for MLO’s.
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[Section 13C, Slide 103]
If the Federal Reserve votes to lower the discount rate, how will this likely affect interest rates on short-term credit?
They will likely increase
[A] They will likely decrease
There will likely be no effect because the discount rate affects mortgage rates only
There will likely be no effect on short-term rates because the discount rate is charged directly to borrowers
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[Section 13A, Slides 56-58]
A buyer applied for a 30-year mortgage on a $220,000 at 4.5% interest. How much of the $1,256 monthly payment paid in the SECOND month will be applied to the principal?
[A] $432.62
$423.62
$823.38
$431.00
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[Section 13A, Slide 88] $220,000×.045=$9,900÷12=$825; $1,256-$825=$431; $220,000-$431=$219,569; $219,569×.045=$9,880.61÷12=$823.38; $1,256-$823.38=$432.62
Federal Reserve Regulation Z requires the disclosure of what?
Legal fees
Survey fees
[A] Loan origination fees
Credit report fees
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[Section 13D, Slide 86]
Which statement does not apply to VA Entitlements?
It is possible to use up only part of an entitlement.
The amount that is used up is equal to the amount that is being guaranteed by an existing VA loan.
[A] A Loan Commitment states the amount of entitlement available to the veteran or serviceman
The unused entitlement is still available.
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[Section 13C, Slide 31-37]
When Borrower Max was approved for an FHA loan, he knew that the cost of the loan would be passed to him in one of two ways. Which would be paid at the time of closing as an FHA fee?
[A] Up-front Mortgage Insurance Premium
Mortgage Insurance Premium
Homeowner’s Insurance
Mortgage Loan Insurance
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[Section 13B, Slide 61]
Kevin wants to buy a home with an FHA loan. The total PITI + MIP on the home he wants to buy will total $652. He is already paying $800 in other long-term debt obligations (car payment of $525 and total credit cards of $275). Kevin’s gross monthly income is $3,300. Will he qualify for this home utilizing an FHA loan?
[A] No, he wouldn’t.
Yes, he would.
Yes, he would qualify by HER, but not by TOR.
Yes, he would qualify by TOR, but not by HER.
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[Section 13B, Slides 63-64] $652/$3,300 = 20% HER (less than the 31% max); $652+$800= $1,452/$3,300 = 44% TOR (at the max TOR allowed)
