Study Buddy Flashcards 2
1
Q
What is 10% tolerance?
A
These are fees that the lender chooses, or the borrower chooses from a list provided by the lender. Remember this tolerance bucket is accumulative. It’s all the things in that bucket added together that can’t exceed 10%.
● Title Insurance if chosen off the lenders list.
● Anything chosen off the lenders list
● Government Recording Fees
2
Q
If the Lender exceeds the tolerance levels (ZERO/10%) they must refund the borrower and give them a revised CD no later than how many days after closing?
A
60 calendar days
3
Q
When does the LE have to be provided to the borrower?
A
Within 3 business days of receiving a complete application.
4
Q
For the LE, what is considered a business day?
A
Each day on which a creditor’s offices are open to the public count as a business day.
5
Q
The terms on a Loan Estimate are valid and binding for a period of how many days from issuance?
A
10 days
6
Q
If the loan estimate is mailed, it must be mailed how many days prior to loan consummation?
A
7 days
7
Q
What are examples of a VALID Change of Circumstances for redisclosure of the LE?
A
● Home was appraised for less than the sales price
● Change in income
● Change in loan product
● Borrower requested rate lock after lender issued original LE
● Information specific to the consumer or transaction that the creditor relied upon when providing the disclosures that was inaccurate or changed after the disclosures were provided
● Changed circumstance that changed the settlement charges
● Consumer requested changes
● An extraordinary event beyond the control of any interested party or other unexpected events specific to the consumer or transaction. (act of god, war or emergency
8
Q
When is the lender required to provide a copy of the CD to the borrower?
A
3 business days prior to closing and at closing
9
Q
What are the three reasons redisclosure can occur with the CD?
A
● A change in the annual percentage rate for the loan
● Switching the loan product.
● A prepayment payment penalty has been added to the loan
10
Q
What is a partial payment policy?
A
Informs the borrower about the lender’s policy and acceptance of payment that is less than the full payment amount due on the note.
11
Q
What’s the penalty for violating RESPA?
A
10K and/or 1 year in prison
12
Q
RESPA provides protection on loans for?
A
Owner occupied residential properties containing 1-4 units. No mixed use or commercial properties.
13
Q
What is Section 6 of RESPA?
A
Mortgage Servicing & Mortgage Servicing Abuses
14
Q
When must the lender respond to a payoff request?
A
Within 7 business days after receiving a written request from the borrower.
15
Q
When must the servicer send the borrower the notice about forced place insurance?
A
First notice at least 45 days before purchasing a force-placed insurance policy. second notice no earlier than 30 days after the first notice and at least 15 days before charging the borrower for force placed insurance.
16
Q
What is Section 8 of RESPA?
A
Kickbacks, fee splitting and unearned fees
17
Q
What is a Qualified Written Request?
A
Request for information about the servicing of the mortgage loan or to assert that the company has made an error. The servicer must generally confirm they received the letter within 5 business days and respond with an answer within 30 business days. A 15 day extension may be given if there were any errors from the borrower on the QWR.
18
Q
What is section 10 of RESPA?
A
Escrow
19
Q
Any excess of $50 or more discovered in the borrower’s escrow must be returned to the borrower in how many business days?
A
30 business days
20
Q
A lender may require a cushion, limited to no more than how much of the total disbursements for the year?
A
1/6 or 2 months
21
Q
If the escrow account is closed for ANY OTHER reason, the lender is required to provide the Escrow Closing Notice within how many business days prior to escrow account being closed?
A
30 business days
22
Q
What is another name for the Home Loan Toolkit and when does the borrower receive it?
A
Know Before You Owe Booklet/Special HUD information booklet/step by step. Must be provided to the borrower within 3 days of a completed loan application.
23
Q
What is the Affiliated Business Arrangement (AFBA)?
A
AFBA is an arrangement in which a person who is in a position to refer business, in connection with a real estate transaction, has an ownership interest of 1% or more in a provider of settlement services.
24
Q
What’s the purpose of the Mortgage Servicing Disclosure?
A
Provides information from the lender about whether or not the servicing of the loan may be transferred, sold, or assigned to some other person or entity during the life of the loan.
25
What is the Initial Escrow Statement and what can it sometimes be referred to as?
Itemized estimate of taxes and insurance premiums as well as escrow account charges that are intended to be paid from the escrow account during the first 12 months of the loan. Sometimes referred to as the "Hello Letter".
26
When must the borrower speak to HUD counselors?
Borrowers must speak to a hud counselor if they are getting a reverse mortgage, high cost mortgage or are first time home buyers (Fannie and Freddie) .
27
How many days prior to transfer of the servicing does the transferring lender/servicer have to send the Servicing Transfer Disclosure (Goodbye Letter)?
Transferring lender/servicer must send it no later than 15 days prior to transferring to the new servicer.
28
If there has been a transfer in the servicing, how many days grace period does the borrower have to get their payment to the right servicer?
There is a 60 day grace period where the previous lender MUST forward payment to the new servicer. NO late fee can be applied.
29
What is a HUD-1 Settlement Statement?
A standardized form to create an itemized list of any credits or charges to the borrower. A HUD-1 form is most commonly used for reverse mortgages. Borrowers must be given a copy of the HUD-1 at least 1 day prior to settlement.
30
Who enforces the Truth in Lending Act
(TILA)?
CFPB
31
Truth in Lending Act (TILA) does not
apply to what?
Commercial, Organizational, Business, and Agricultural Credit (COBRA)
32
Truth in Lending Act (TILA) disclosures
must be kept for years?
2 years
33
What does APR Stand for?
Annual Percentage Rate
34
What is calculated in the APR and what is not calculated in the APR?
Calculated in APR are services that are financed in the mortgage (P&I). Things that are NOT calculated in APR are services that are not included in the mortgage or are third party fees.
35
What is a finance charge?
The cost of consumer credit as a dollar amount. It includes any charge payable directly or indirectly by the consumer and imposed directly or indirectly by the creditor as an incident to or a condition of the extension of credit. These are items that will not be paid in a cash transaction.
36
When is the balloon disclosure given to the borrower and why?
The balloon disclosure is given to the borrower 90 days prior to the balloon payment becoming due, and it is given to prevent Payment shock.
37
When is the when your home is on the line disclosure given to the borrower and for what type of loan?
It's given within three days of a completed loan application and is for HELOC’s only.
38
When does the borrower receive the Transfer of Ownership Disclosure?
In an assignment of mortgage, if it's their primary residence, the new lender must send it to the borrower within 30 days after acquisition.
39
If a consumer wants to rescind (cancel) the mortgage contract, the three-day clock does not start until what three events have happened?
● The Promissory Note is signed.
● Truth in Lending disclosure has been delivered. (in most circumstances, this will be found in the Closing Disclosure)
● Borrower has received two copies of a notice explaining your right to rescind.(usually
given at closing)
40
If the borrower does not receive the notice of their right to rescind, or the disclosures were incorrect.
How long is the borrower's right of rescission extended till?
The borrower may rescind the loan up to three years from the date of closing.
41
What must the consumer do to waive their right to rescind?
The consumer must give a written statement that specifically waives the right, and also includes a brief description of the emergency.
42
What types of loans DO NOT have a Right
of Rescission?
● Second homes/ vacation homes
● Investment properties
● Purchases
43
How many years after the date of payment are financial institutions generally required to maintain sufficient records of all compensation paid to loan originators?
3 years after the date of payment
44
According to the loan originator compensation rule, loan originators may only be compensated based on what?
The principal loan amount - comp cannot be based on any other loan terms or condition, such APR or interest rate.
45
Under the Loan originator Compensation Rule, When the loan originator persuades a borrower towards a specific loan or loan product in order to gain a higher compensation when the loan is not in the best interest of the borrower is called what?
Loan steering
46
What is a Qualified Mortgage?
QM has certain, less risky features that help make it more likely that the borrower will be able to afford the loan. A QM has requirements to make mortgages safer, easier to understand, and put a cap on the fees lenders can charge. If a loan is a QM it makes it easier to sell on the secondary market because it safe harbors the lender.
47
What is the The Ability-To-Repay rule?
A determination that most lenders are required to make, to show that the borrower is able to pay back the loan based on the loan terms.
48
For a QM the APR cannot exceed APOR by first-lien covered transaction with a loan greater than $78,277 by what %?
0.035
49
For a QM the APR cannot For exceed APOR by first lien covered transaction secured by a manufactured home with a loan amount less than $130,461?
0.065
50
For a QM the APR cannot exceed APOR by first lien covered transaction Subordinate-lien covered transaction with a loan amount less than $78,277?
0.065
51
What are some loans that are exempt under ATR rule?
● Temporary loans 12 months or less including construction or bridge
● Reverse Mortgage Loans
● Non-Qualified Mortgages
● Timeshares
● Helocs
52
The Home Ownership and Equity Protection Act (HOEPA) is what section under what Act?
Section 32 of the Truth in Lending Act (TILA)
53
A loan is considered a high-cost mortgage if its APR exceeds the Average Prime
Offer Rate (APOR) by?
● 6.5% for first-mortgage transactions $50K or more
● 8.5% for first-mortgage transactions less than $50K ($49,999)
● 8.5% for subordinate-lien transactions
54
What transactions are exempt from High-Cost Mortgages?
● Reverse mortgage
● Construction loan on a new home
● Loans from Housing Finance Agency
● Loans from the United States Department of Agriculture's Rural Housing Service
55
A loan will be considered a high-priced mortgage loan (HPML) if the APR is a certain percentage higher than the APOR by how much?
● First-lien mortgage: APR is 1.5% over the APOR
● First-lien jumbo mortgage: APR is over 2.5% APOR
● Subordinate-lien mortgage: APR is 3.5% over APOR
56
For High-Priced Mortgage loans, when can the borrower request that the escrow be canceled?
After 5 years, The loan’s unpaid principal balance must be less than 80 percent of the original value of the property and the borrower must not be currently delinquent.
57
Under HPML if two appraisals are required. They may not be performed by the same appraiser. Who is Responsible to pay for a second appraisal?
The lender
58
Who enforces the Equal Credit Opportunity act?
CFPB
59
What are the penalties for violating the Equal Credit Opportunity act and How long do they have to sue?
Civil penalties are $5,000 per day. A pattern of misconduct can result in civil penalties of $25,000. Punitive damages up to $10,000 in individual lawsuits and the lesser of $500,000 or 1% of the creditor's net worth. If it is a civil action, consumers have within 5 years after the date of the occurrence of the violation.
60
What does creditworthiness mean?
Is the extent to which a person or company is considered suitable to receive financial credit, often based on their reliability in paying money back in the past based on their credit history.
61
Under ECOA, what age is considered elderly?
62 and over.
62
When an application is complete, how many days does the creditor have to notify the applicant of the credit decision, counteroffer or denial of application?
30 days
63
After receiving an adverse action and if no reason was given, the borrower can request a statement of reasons within how many days and how many days does the lender have to deliver it?
Borrower has 60 days and the lender has 30 days.
64
If the borrower wants a copy of the appraisal, the creditor must deliver it no later than?
3 days prior to consummation
65
If the borrower is denied based on the appraisal, how many days do they have to request a copy and how many days does the lender have to deliver it?
Borrower has 90 days to request a copy and the lender has 30 days to deliver.
66
What type of discrimination is an explicit and obvious display of treatment based on a protected class. Overt discrimination is what most would think of when they hear the word discrimination?
Overt discrimination
67
This type of discrimination occurs when a creditor has policies in place that may have an adverse impact on applicants based on a protected class that is not directly seen, but seen through data collected?
Disparate impact
68
What Act is also known as the Fair Housing Act?
Title VIII of the Civil Rights Act of 1968.
69
Who Enforces Fair Housing Act?
Department of Housing and Urban Development (HUD).
70
What are the protected classes under The Fair Housing?
● Sex (HUD Equal Access Rule)
● Color
● National Origin
● Race
● Religion
● Familial Status
● Handicap/Disability
71
What are the 4 main main things FHA deals with?
● Redlining
● Reverse Redlining
● Steering
● Blockbusting
72
What is Reverse Redlining under the Fair Housing Act?
When a lender will only approve loans in a particular neighborhood, and will choose not to do business in lower class areas, often based on income, race, or ethnicity within particular geographical areas. Done by unethical lenders.
73
What is Blockbusting under the Fair Housing Act?
The practice of persuading owners to sell property cheaply because of the fear of people of another race or class moving into the neighborhood, and thus profiting by reselling at a higher price. Done by unethical Real Estate Agents.
74
If you work for a broker, what slogan must be used on all advertising? What if you work for a lender? And what logo must appear on all advertising?
Equal Housing Opportunity, if you work for a Broker. Equal Housing Lender, if you work for a Lender. And both must show the Equal Housing Logo on all advertisements.
75
What three federal banking agencies, or regulators, are responsible for the The Community Reinvestment Act?
● Federal Deposit Insurance Corporation (FDIC)
● Federal Reserve Board (FRB)
● Office of the Comptroller
of the Currency (OCC)
76
Under HMDA lenders are required to maintain a log of applications and submit the information to the federal government. What is this report called?
Loan Application Register (LAR)
77
The Loan Application Register (LAR) is kept for how many years and it must be reported when?
Must be retained for 3 Years and is due annually by March 1st
78
What types of dwellings are subject to HMDA reporting?
● Home Purchases
● Refinance
● Home Improvement loans
● Construction to Permanent loans (Does NOT apply to construction only)
79
What's the purpose of FCRA?
FCRA regulates credit reporting agencies and creditors. It ensures the information that is collected for the credit report to be fair and accurate. The law is intended to protect consumers from misinformation being used against them.
80
What are some things that the Credit reporting agencies collect?
● Original loan amount
● Credit limit on a credit card
● Balance on a credit card/loan
● Payment status
● Items that are sent to collections or are being disputed
● Public records such as judgments and bankruptcies
81
Under FCRA If there is a mistake on the credit report, within how many days does it need to be corrected?
30 days to have it corrected
82
Before the Credit Reporting Agency adds negative information to the credit report, how many days must a consumer be provided with notification?
A notification must be given within 30 days.
83
Adverse Action Notice which is also known as?
Denial letter
84
What is the penalty for violating FCRA and how long does the consumer have to sue?
The Penalty for violating FCRA is up to $1,000. Two years after the date the violation was discovered or within five years of the date the violation occurred. Whatever one happens sooner.
85
When is the Credit Score Disclosure given?
Gives the borrower the score they are using to offer credit. The Credit Score Disclosure is usually given with the Notice to The Home Loan Applicant, which is given to all borrowers 3 days after a completed loan application.
86
What Act is an amendment of the Fair Credit Reporting Act (FCRA)?
Fair and Accurate Credit Transaction Act of 2003/ REG V (FACT ACT)
87
Under FACTA, When can the consumer get a free copy of their credit report and where can they obtain it?
One free credit report a year from each of the 3 credit reporting agencies. Can be obtain at www.annualcreditreport.com.
88
What section of FACTA deals with Freeze, Fraud and Active duty alert?
(SEC. 112)
89
What section of FACTA establishes and maintains guidelines for use by each financial institution and creditor regarding identity theft and updates such guidelines as often as necessary?
(SEC. 114) Establishment of Procedures for the Identification of Possible Instances of Identity Theft. (Red Flag Rules)
90
Who enforces GLBA?
FTC
91
What act requires financial institutions to safeguard sensitive information and be transparent about information-sharing practices?
The Gramm–Leach–Bliley Act (GLBA)
92
What is The Financial Privacy Rule ?
Financial Privacy Rule under GLBA requires financial institutions to give their customers and/or consumers a clear and detailed notice that accurately reflects the privacy policies and practices of the company. It also allows the consumer the right to opt out of having their information shared with non affiliated third parties.
93
What is Pretexting?
Pretexting under GLBA involves collecting information under false pretense. Prohibits financial institutions or customers to use false, fictitious, or fraudulent statements to get customer information.
94
What is a person called who has a business relationship which has been established, and what is an individual called who has done business with but doesn’t continue to do business with?
Customer/Consumer
95
What registry provides consumers with the ability to place their telephone number on a registry?
Do-Not-Call-List (DNC List). Prohibits telemarketers from calling anyone whose name is on the registry unless they meet certain criteria.
96
How often does the FTC require all telemarketers subject to its rules to check and update the Registry, and how long must documented records be kept for?
Must be updated every 31 days and kept for 24 Months.
97
How long can a telemarketer call a consumer and a customer?
Consumers can be called for 3 Months/ Customers can bee called for 18 Months
98
What's the 2024 penalty for violating the DNC?
51744
99
Who is a formal interagency body empowered to prescribe uniform principles, standards, and report forms for the 5 banking regulators?
(FFIEC) Federal Financial Institutions Examination Council
100
Why was MARS RULE created?
To protect homeowners who are facing foreclosure from any unfair and deceptive practices associated with mortgage assistance relief services.
101
Who enforces MARS?
CFPB
102
What regulation governs advertising within the mortgage industry. It prohibits deceptive acts in mortgage advertising and other commercial communications?
Mortgage Acts and Practices (REG N) (MAP)
103
Under MAP, how long must commercial communications be kept?
2 years
104
PMI is insurance that protects lenders from the risk of what?
Default and foreclosure
105
If the borrower is current on their payments they can request cancellation of PMI when their LTV reaches what percent?
0.8
106
What does the acronym E-Sign Act stand for?
Electronic Signatures in Global and Global National Commerce Act
107
Who created the US Patriot Act?
US Congress
108
What act was brought about to discourage and punish terrorist activities and gives law enforcement the tools they need to investigate?
US Patriot Act
109
What act requires each financial institution to establish a compliance program and are subject to recordkeeping requirements and It fights against money laundering and financing of terrorism?
The Bank Secrecy Act/Anti Money Laundering (BSA/AML)
110
A completed CTR must be electronically filed with _____ within _____ days after the date of the transaction? The bank must retain copies of CTRs for ____ years from the date of the report?
FinCEN, 15 calendar days, 5 years
111
Financial institutions must fill out a SAR report if they detect transactions of how much money in someone's account? How long do they have to report it?
$5,000 OR MORE and must be filed within 30 calendar days if identifiable and 60 calendar days If not identifiable.
112
What act monitors the financial stability of major financial firms? The failure of these companies (deemed too big to fail) could have a serious negative impact on the U.S. economy.
Dodd-Frank Act
113
What's the purpose of the SAFE ACT?
SAFE ACT regulates the mortgage industry on a national level, establishes the minimum standards that must be met for licensure and requires mortgage loan originators be either state-licensed or federally registered.
114
What is the identifier that permanently identifies a registered or licensed MLO?
Unique identifier (NMLS #)
115
Immediate family members include?
● Parents (stepparents)
● Spouse
● Children (stepchildren)
● Siblings (step siblings)
● Grandparents
● Grandchildren
● Adopted family members.
116
Nationwide Mortgage Licensing System and Registry, or NMLS system, was developed and is maintained by?
The Conference of State Bank Supervisors (CSBS) and the American Association of Residential Mortgage Regulators (AARMR).
117
Whose role is to analyze if the borrower can make the necessary monthly mortgage payment and decide if the loan will be approved?
Underwriter
118
For an individual to be eligible for a loan originator license, they can not have been convicted of, or pled guilty to a felony during the period of _____ years preceding the date of the application for licensing?
7 years
119
To be eligible to renew a loan originator license, how many hours of annual continuing education is required and what is the break down?
8 hours:
● 3 hours of Federal law
● 2 hours of ethics
● 2 hours of training related to nontraditional mortgage products
● 1 hour of electives
120
Who has legal authority to discipline loan originator licensees with appropriate enforcement actions, such as license suspensions or revocations, cease-and-desist orders, civil money penalties, and consumer refunds for violations of state or Federal law?
A state supervisory
121
A licensed attorney performing activities that come within the definition of a loan originator is not required to be licensed, provided that such activities are?
● Carried out within an attorney-client relationship
● Accomplished by the attorney in compliance with all applicable laws, rules, ethics, and standards
122
What is the penalty for violating the SAFE ACT?
$35,516 (2024) $34,401
(2023) NMLS states $25K (know both)
123
When is the Residential Mortgage Loan Activity Report (RMLAR) due and what is it for?
Within 45 days after every calendar quarter. Collects information about application, closed loan, individual mortgage loan originator (MLO), line of credit, servicing, and repurchase information by state.
124
When is the Financial Condition report (FC) due and what is it for?
Due annually, within 90 days of the company's fiscal year end and collects financial information at the company level, which means it is not separated by each state. It is the company in whole.
125
How long after the date of the application does an MLO who is changing employment from a depository institution (bank) to a state licensed mortgage company have to be registered with NMLS before using Transitional Authority?
One-year period after the date of the application
126
Transitional Authority allows MLO’s to originate loans for how many days while completing any state-specific requirements for licensure such as education or testing?
120 days
127
If a complaint is filed with the CFPB, the company is expected to report back on any steps taken to address the issue or communicate with the consumer to get the information needed for the complaint within how many days?
15 Days
128
What is the HUD equal access rule?
It ensures that all individuals, regardless of sexual orientation or gender identity, have equal access to housing assistance.
129
Who established the Government National Mortgage Association (GinnieMae) ?
Department of Housing and Urban Development (HUD)
130
What does FNMA stand for?
And what is it known as?
Federal National Mortgage Association/Fannie Mae
131
What is the conforming loan?
2025 is $806,500; 2024 is $766,550
132
Do FNMA and FHLMC purchase conforming FHA, VA or USDA loans?
Yes, they will purchase FHA, VA (fixed rate only) and USDA (not agriculture).
133
How far back does FNMA and FHLMC require all credit and public record information to be reviewed?
7 years
134
What’s another name for Fannie Form 1003 and what is it for?
Uniform Residential Loan Application (URLA) is a loan application designed by FNMA and FHLMC that is used by lenders to obtain personal and financial information from borrowers who apply for a mortgage loan that is secured by a one to four unit residential real estate. (application)
135
What’s another name for Fannie Form 1004 and what is it for?
Uniform Residential Appraisal Report (URAR) is used by an appraiser when preparing an appraisal for a 1-2 family owner occupied residence to provide the mortgage lender with an opinion of fair market value of the property.
136
What’s another name for Fannie Form 1005 and what is it for?
Verification of Employment (VOE) allows employers to release information regarding the applicant's past and present employment that is listed on the application (payroll).
137
What’s another name for Fannie Form 1007 and what is it for?
Single-Family Comparable Rent Schedule is intended to provide the appraiser with a familiar format to estimate the market rent of the subject property.
138
What’s another name for Fannie Form 1009?
Residential Loan Application for Reverse Mortgages is used as a Loan application for reverse mortgages. (HECM)
139
The late charge for a conventional mortgage can be as high as what%?
5% of the principal and interest payment (P&I)
140
What’s the max seller concessions allowed for conventional?
● 3% if ltv is 90.001% and above
● 6% if LTV is 75.001%-90%
● 9% if LTV is 75% and below
● 2% for investment properties
Sales price or the appraised value. (the lower of the two)
141
What is the minimum down payment requirement for Conventional loans?
3% for first-time homebuyers and 5% for everyone else
142
What % of the down payment amount MUST come from the borrower’s OWN funds before getting a gift for conventional loans?
5% of the down payment
143
What does GNMA stand for and what is it known as?
The Government National Mortgage Association (GNMA) also known as Ginnie Mae.
144
What’s the late fee for all the government mortgages (FHA, VA, USDA)?
4% of the principal and interest (P&I only)
145
With Federal Housing Administration (FHA) loans. Monthly Insurance Premium (MIP) protects lenders from what?
Protects lenders against losses if a property owner defaults on their mortgage. This will allow the lender to get paid back for the unpaid principal balance.
146
How long must the borrower pay Monthly Insurance Premium (MIP) for?
MIP is for the life of the loan unless the borrower keeps an LTV of 90 percent or less for 11 years straight, meaning you must put 10% down to start and you must hold that LTV for 11 years.
147
What is The Federal Housing Administration (FHA) Automated Underwriting system (AUS) called?
Total Score Card
148
What is the maximum amount a seller can contribute towards the borrower's closing cost?
6% of the lower of the sale price or appraisal price
149
If the borrower is purchasing a home being sold within ______ days, the borrower is
ineligible to use an FHA loan?
90 days
150
Within how many days of signing the mortgage must the borrower reside on the property with an FHA loan?
60 days
151
For FHA loans, In order to rent the property as an investment it must be the borrower's primary residence for how long?
At least 1 year
152
What is a FHA loan 203(b)?
Basic Fixed Rate Home Mortgage Loan, is the most common of all FHA mortgage insurance programs for one to four unit residential properties.
153
What is a FHA loan 203(g)?
Good Neighbor Next Door Mortgage Loan is offered to law enforcement officers, teachers (pre-Kindergarten through 12th grade), firefighters, and emergency medical technicians. An eligible buyer must commit to live in the property for 36 months as his/her principal residence. HUD offers a substantial incentive in the form of a discount of 50% from the appraised value of the home.
154
What is a FHA loan 245?
Graduated Payment Mortgage (GPM) are designed for those who have lower incomes available to purchase a home and make mortgage payments that will grow along with their earning potential. This mortgage is for people who will be making more money in the future. Think of college graduates. This loan starts off negatively amortized, but as the payments increase each year, it becomes fully amortized by the end.
155
What is a FHA loan 251?
Adjustable Rate Mortgage Loan (ARM) FHA insures home purchases or loan refinances on loans with interest rates that may increase or decrease over time but helps keep the initial costs down.
156
What’s the most common FHA Streamline Refinance?
Non-credit qualifying streamline refinance requires the lender to still check your credit, but they consider fewer factors within your credit report. For a non-credit qualifying refinance, your lender may not need to verify your income. This makes for a faster, easier approval process. No appraisal is required.
157
What is a Temporary 2-1 buydown?
A mortgage agreement that provides the borrower with a lower interest rate for the first two years of the loan. First year it lowers the interest rate by 2% ,Second year lowers the interest rate by 1%, then goes back to its full note rate by year three. For example, if the note rate is 6%, the first year would be 4%, the second year would be 5%, and the third year it would go back to 6%.
158
On loan amounts over $144,000, how much does the VA guarantee if a borrower has a full entitlement?
VA guarantees 25% of the loan amount.
159
What is residual income?
It’s the amount of money which is left over each month after paying your monthly expenses.
160
What is the VA Loan one-time nonrefundable variable funding fee?
2.3% (3.6% for subsequent). Loans after April 7, 2023 the funding fee will be 2.15% (3.3% for subsequent).
161
With a VA Loan, what is a DD-214?
Discharge papers or report of separation - issued by the Department of Defense and is required if the veteran has been discharged from the military.
162
With a VA loan, what is the NGB form 23?
It gives proof of where the veteran stands in respect to retirement if the veteran is no longer in the military.
163
With a VA loan, what is the Notice of Value (NOV)?
The NOV will inform the Veteran about the results of the appraisal report and conditions that must be met for guarantee of the loan.
164
Borrowers with income of up to what % of the area median may be eligible for 30-year guaranteed loans?
115% of the area median
165
USDA loans do have a one time funding fee of what %?
1% that is paid at closing or can be included in the loan.
166
What is the USDA Automated Underwriting System (AUS) called ?
Guaranteed Underwriting System (GUS).
167
What is an appraiser?
A person that develops an opinion of the market value or other value of a product, most notably real estate. An appraiser must be licensed or certified by the State in which the property to be appraised is located.
168
What is an appraisal contingency?
A contingency in a sales contract that the property must appraise at a value that is equal to or greater than your offering price.
169
What method is used in the real estate industry that compares one property to similar ones recently sold in the area?
Sales comparison approach (Market Approach)
170
Lenders typically require that any adjustments that exceed ___% line, _____% net, or
______% gross must be explained and reconciled in the report to show the need for such dissimilar comparables?
10%, 15%, 25%
171
What is the principle of substitution?
It’s the maximum value of a property usually established by the cost of acquiring an equivalent substitute property that has the same use, design, and income.
172
What is the cost approach?
It’s the method used in the real estate industry that estimates the price a buyer should pay for a piece of property which is equal to the cost to build an equivalent building.
173
What is Appraiser Independence Requirements (AIR) commonly known as?
Home Valuation Code of Conduct (HVCC)
174
The appraiser independence requirements (AIRs) were designed to prevent what?
Attempting to influence the development, reporting, result, or review of an appraisal through coercion, extortion, collusion, compensation, inducement, intimidation, bribery, or in any other manner.
175
What is an Amortization Schedule?
The amortization schedule shows how much in principal and interest is paid overtime.
176
What type of Amortization is where borrowers pay off their balance based on the loan’s amortization schedule, which means that the borrower will pay off their loan at the end of the loan’s term?
Fully amortizing loan
177
What type of Amortization is interest only payments for a set period of time. Not all
interest-only mortgages work in the same way. Requires a balloon payment for the entire principal amount after the interest only payment term expires?
Non-amortized
178
What is a lien?
A lien is a claim or legal right against assets that are typically used as collateral to satisfy a debt. The lien essentially gives the creditor, who is also the lienholder, the ability to claim the property if they don’t pay their debt to them.
179
What is a junior lien?
Is a mortgage that is subordinate to a senior lien. Also known as a second mortgage. There is an unlimited possible number of junior liens and no restrictions on terms.
180
What is an involuntary lien?
Can be put on a property without consent. For example, your property might have an involuntary lien if you’ve failed to pay property taxes or you didn’t pay a contractor.
181
What is a tax lien?
A Tax lien is involuntary liens placed against your property if you fail to pay taxes owed. Tax liens will take priority over all other liens, even if another lien was in place already.
182
What is a judgment lien?
A Judgment lien is any involuntary lien placed on the homeowners property by a judge when someone wins a lawsuit against them.
183
What is an attachment lien?
Attachment liens are involuntary liens that are placed on the homeowner’s property during a legal matter, as in a divorce or bankruptcy which prevents the property from being sold during the duration of the proceedings.
184
All personal property that is sold or traded must be _____ before the property can be transferred to another party?
Free of liens and other debts (clean title)
185
What form of concurrent real estate ownership holds title, individually, for their respective piece of the property. Each individual can transfer, sell or will their part?
Tenancy in common
186
What form of concurrent real estate involves two or more individuals holding a real estate title jointly, where both individuals have equal rights to the property during their lifetime.
With this type of ownership, the holder cannot transfer, sell, or will their part?
Joint tenancy (can't sell the joint)
187
What is a Chain of title?
The historical transfer of ownership from the first owner back to the last owner in chronological order.
188
What document lists all the liens, defects, and obligations that affect the subject property and provides the requirements that must be met before a title company can insure a title as marketable?
A title commitment binder
189
What does it mean to have clear title?
It means that the owner has an undisputed claim to the property or asset and is clear of all liens.
190
What is legal title?
Legal title refers to the actual ownership of real property. A borrower who has legal title has the right to transfer ownership of the property or sell the property to another party. (Borrower holds legal title in mortgages)(Trustee holds legal title in Trust Deeds).
191
What is used in a legal action taken to clarify ownership of a given property. Can also be used to solve boundary issues or to remove any clouds on the title?
Quiet title action
192
When it comes to titles, what is a simultaneous issue?
Simultaneous issue is done in conjunction with the issuance of the owners and the lenders title policies when it is purchased at the same time.
193
What's a property survey?
Done to determine or confirm land boundaries, such as the plot of land a home sits on, and any sub-surface improvements.
194
What's it called where a property owner violates the property rights of his neighbor by building on or extending a structure onto the neighbor's land or property?
An encroachment
195
Who is the grantor?
The grantor is the owner of the property is someone who transfers a property right to a grantee.
196
What is a promise in a mortgage or deed that requires or prevents certain uses of the property?
It applies to all owners of the property. Covenant
197
What type of deed is used to transfer property between familiar parties, such as family members or even divorced spouses?
Quitclaim Deed
198
What type of deed is used to offer various legal protections to the grantor, in the event there’s a problem or defect with the title once it’s been transferred?
Warranty Deed
199
What type of deed offers no guarantee that the property is free of debts or liens and only states that the grantor is the title-holder?
Bargain and Sale Deed. Grantee acquires any lien against the property along with the title.
200
What type of deed transfers the legal title of a property to the trustor from the trustee when the note is paid off?
Reconveyance Deed. The trustor is the borrower of debt for the purchase of the property.
201
What is the part of a deed called, that describes and defines the property and has to cover the parcel of land with accuracy and precision to be easily identified and located?
The legal description
202
What are lien theory jurisdictions?
The Borrower will hold legal title to the real estate property for the life of the mortgage.
The mortgage agreement serves as the lender’s lien on the property until the loan is
paid back completely.
203
What is a promissory note?
is a financial instrument that shows legal evidence and contains a written promise by the borrower (maker/payor) to the lender (payee) a definite sum of money.
204
What is a mortgage?
A voluntary lien in which the property serves as collateral. Mortgages have judicial foreclosure and require court action to foreclose on the property.
205
In a mortgage what is the party called that promises to repay the loan as well as the property tax, hazard insurance and keeps the property in proper upkeep?
Mortgagor (Borrower). If they fail to do any of the above they are in default and property can be foreclosed on.
206
What is a document confirming that the borrower has paid off the mortgage in full and that the mortgage is no longer a lien on the property called?
Satisfaction of mortgage
207
Who holds the Equitable title in trust deeds?
The Trustor (Borrower)
208
Who holds the deed of trust and the note?
Beneficiary (Lender)
209
What type of home loan is for seniors ages 62 and older, who have paid off their mortgage or paid off a large part of the mortgage.?
Reverse Mortgage
210
What type of reverse mortgage is the least expensive option for a reverse mortgage loan?
It is only used for a single, lender-approved item like repairs to the home or property taxes.
Single-purpose reverse mortgages.
211
What type of reverse mortgage can the borrower qualify for if the property is worth more than the $1,149,825 for 2024, ($1,089,300 for 2023)?
Proprietary reverse mortgages
212
In a reverse mortgage, instead of getting the LE and CD, what disclosures does the borrower receive?
GFE, Initial TIL, HUD-1, Final TIL
213
What is the maximum loan limit on a reverse mortgage for federally backed HECMs?
$1,149,825 for 2024, ($1,089,300 for 2023)
214
What is a hybrid mortgage?
Combination of fixed rate and adjustable-rate mortgage. It begins with a fixed interest rate for a set period and then the rate will adjust according to loan terms.
215
What is an option ARM?
Type of adjustable-rate mortgage where the borrower has several options, option ARMs have alternative payment options where the borrower can make significantly smaller payments by making interest-only payments or minimum payments.
216
What are the 5 common indices?
● A cost of funds index (COFI)
● The Cost of Savings Index (COSI)
● Secured Overnight Financing Rate (SOFR)
● The U.S. Treasury
● The prime rate
217
What equation is used to determine the fully indexed rate?
Index + Margin = Fully Indexed Rate.
218
What is the introductory rate charged on adjustable rate mortgages that entices borrowers by charging a low initial rate called?
Teaser rate
219
What occurs when suddenly the rate or payment increases to a large amount that is to be paid all at once?
Payment shock
220
What is a construction-to-permanent (Take Out) loan?
A loan that converts to a permanent mortgage when the construction is completed. The financing option has two parts: a loan to cover the costs of construction and a mortgage
on the finished home.
221
What are examples of ALT-A Loans?
● No Income No Assets (NINA)
● Stated Income, Stated Assets (SISA)
● No Income Verified Assets (NIVA)
● Stated Income Verified Assets (SIVA)
● No Doc
● No Ratio
222
A transaction in which an existing obligation that was subject to a secured lien on residential real property is satisfied and replaced by a new obligation?
Refinance
223
What are 3 typical requirements to refinance a balloon mortgage?
● The home is owner occupied
● There is no second mortgage on the home
● The mortgage payments are current
224
What type of loan would homeowners use to purchase a new home while they wait for their current home to sell?
Bridge loan. It's a short term loan.
225
What is a package mortgage?
Loan secured by real estate and in which the personal property included in the loan, such as refrigerator, washer and dryer and furniture is
included in the purchase price of the house.
226
What type of loan is a lump sum drawn from equity in the home that is paid back at a fixed interest rate for the life of the loan where the borrower is NOT permitted to re-borrow any portion of the loan until it has been repaid to the lender?
Fixed Home Equity Loan
227
What is a blanket mortgage?
Single mortgage that covers two or more pieces of property. Commonly used by developers, real estate investors, and flippers.
228
What is seller financing?
Also known as a carry-back loan, is a real estate agreement where the seller handles the mortgage process instead of a financial institution. Instead of applying for a conventional bank mortgage, the buyer signs a mortgage with the seller.
229
What is a purchase money mortgage?
Type of seller financing, where a mortgage is issued to the borrower by the seller of a home as part of the purchase transaction. This is usually in situations where the buyer can not qualify for a mortgage through traditional lending channels.
230
What is it called when the original mortgagee transfers the mortgage to a lender or investor?
Assignment of mortgage
231
What is an acceleration clause?
Allows lenders to demand the remainder of an outstanding payment balance if the borrower defaults.
232
What is a prepayment privilege clause?
Allows the borrower to pay all or part of a debt prior to its maturity date, without risk of
penalty.
233
What is a defeasance clause?
Requires the borrower to receive the legal title to the property once the loan has been paid off in full. This is done in title theory states.
234
What is a power of sale clause?
Allows for foreclosure without judicial review. The lender must follow specific guidelines and procedures to take action. Done in title theory states.
235
What is an exculpatory Clause?
States the lender cannot acquire the borrower’s assets as collateral for the mortgage if the sale of the home was not sufficient. Can not file a deficiency judgment.
236
What is a partial release clause?
Allows the borrower to sell parcels out of a blanket mortgage as they are sold and use the funds to purchase another property.
237
What is a recast clause?
Is a contract provision that allows a lender to adjust the payments on an adjustable rate mortgage periodically so as it becomes fully amortizing.
238
NFIP is managed by who?
Federal Emergency Management Agency (FEMA)
239
What determines if an area is a Special Flood Hazard Area (SFHA)?
According to FEMA, SFHA zones have a 1% or greater chance of being inundated by a flood event annually. The agency defines this 1% probability as the "base flood"
or "100-year flood" event.
240
What is the high-risk flood zone?
The greatest risk of experiencing a flood. The homes that are in these flood zones are designated with an A or V. Zone A designates inland flood zones while Zone V indicates coastal areas.
241
What is the low flood zone?
Flood Zone C and X are low-risk areas.These zones usually have minimal flooding. Low risk does not require flood insurance.
242
What is a flood certification?
Determines whether the property falls under a flood zone. The lender will order the flood certification and will charge the flood certification fee to the buyer.
243
What is a dwelling?
A residential structure that contains 1 to 4 units, which is or is not attached to real property. This would also include mobile homes and trailers if used as a residence, and individual condominium units and cooperative units.
244
What is real property?
Fixed property, example land and buildings.
245
What are 2 types of freehold estates?
● Fee simple
● Life estate
246
What is a life estate?
The type of ownership in which the owner owns the property for their life. When the life estate holder dies, the life estate reverts back to the original grantor or whoever they left it to.
247
What is an escrow account?
Set up by the lender for the borrower to pay monthly property taxes, homeowner's insurance and PMI on the mortgage. The Lender issues an escrow analysis to show what was paid out and the amount of the upcoming year's escrow payments.
248
What is a lender?
The creditor or creditors named in the debt obligation and document creating the lien.
249
What is a natural person?
A human being
250
What is a co-borrower?
An additional person who assumes equal responsibility for repayment of a loan and is fully obligated under the terms of the loan. This person also has equal rights to the proceeds of the loan.
251
What is collateral?
An asset, such as a car or a home, which is used for securing the repayment of a loan. The borrower risks losing the asset if the loan is not repaid.
252
What is a contingency?
A specified condition in a sales contract that must be satisfied before the home can sell. The 2 most common contingencies are that the house must pass inspection and that the borrower must be approved for a loan.
253
What is a conveyance?
Transfers ownership of property from one entity to another.
254
What is default?
A failure to make mortgage payments on time or to meet other terms of a loan. Default can lead to foreclosure.
255
What is per diem?
The amount of interest paid each day for the mortgage. This will determine the interest costs between the closing day and the day the monthly payments start.
256
How much of homeowners insurance must be paid prior to or at closing?
12 months
257
What is the primary mortgage market?
Where home loans originate before they’re sold to investors in the secondary mortgage market. The lender deals directly with the borrower.
258
What is a direct lender or investor?
A financial institution or private entity that actually provides the loan for a mortgage which may be banks and other financial institutions. This happens on the primary market with no mortgage broker involved.
259
What is wet settlement (wet funding)?
Occurs in states that require all paperwork to be completed and loan to be funded the day of closing.
260
What are Mortgage-Backed Securities (MBS)?
A pool (bundle) of loans from the principal and interest from residential mortgage loans. The bank handles the loans on the primary market and then sells them at a discount to be packaged as MBS’s to investors as a type of collateralized bond on the secondary market.
261
What is net tangible benefit?
The financial advantage a borrower gains by refinancing. When the loan is refinanced, the borrower is taking on a completely new loan and it is a requirement that there is a net tangible benefit to the borrower.
262
Interagency Guidance on Nontraditional Mortgage Product addresses what?
Nontraditional mortgage risks associated with the growing use of mortgage products that allow borrowers to defer payment of principal and interest.
263
What is equity?
The difference between the fair market value (appraised value) of your home and your outstanding mortgage balances and other liens.
264
What are closing costs?
The upfront fees associated with getting a mortgage. They include a variety of expenses paid at the time of consummation, such as a credit report fee, title search fee, an appraisal fee, and others.
265
What is depreciation?
A reduction in the value of a property with the passage of time, due in particular to wear and tear. Can be applied to assets you use in a business or as an investment.
266
What is functional obsolescence?
The reduction of an object's usefulness or desirability because of an outdated design feature that cannot be easily changed or updated.
267
What are liquid assets?
Assets that can be easily converted into cash quickly. Some examples are cash, U.S. Treasury bills, bonds or notes, mutual funds, money market funds, stocks, and retirement investment accounts.
268
What are liabilities?
Liabilities are debts. Examples of liabilities include credit card balances, mortgages, and installment loans.
269
What is a closed-end mortgage?
loan that has an amortization schedule. These generally cannot be renegotiated, repaid, or refinanced until the entire mortgage has been paid off.
270
What is an assumable loan?
A loan that may be transferred to someone else while maintaining the same terms.
271
What is a subject to mortgage?
When the borrower is essentially buying the home subject to the existing mortgage. The seller is not paying off the original mortgage with the sale, instead the new borrower is making the payments on the existing mortgage. The
borrower makes payments to the seller.
272
What is a warehouse line of credit?
Allows a lender/investor to finance a loan without using its own capital, they will get a warehouse line of credit to fund the loan.
273
What does a valid real estate contract include?
● The party must be the legal age of 18 or older and deemed mentally competent.
● A contract cannot be enforced if the object is considered to be against a public policy or illegal, depending upon the particular jurisdiction. This is known as lawful object.
● A clear and specific consideration must be included in the agreement. This will be something of value.
● The contract must hold mutual consent and must
be agreed upon by both parties.
274
What is fiduciary duty?
Occurs when a fiduciary fails to act responsibly in the best interests of a client. A fiduciary must maintain the confidentiality of all information relating to the beneficiary. They must not use any form of it, whether written or spoken, for their personal gain.
275
What are capital improvements?
Is the addition of a structural change or the improvements that will either enhance the property's overall value.
276
What is an estoppel letter?
Is the payoff letter from any lien holder requesting what the payoff is prior to closing.
277
What is a mortgage banker?
A company, individual, or institution that originates mortgages. Mortgage bankers use their own funds, or funds borrowed from a warehouse lender, to fund mortgages.
278
What is a pre-qualification?
An informal evaluation of how much home you can afford based on what information is stated by the borrower like credit, debt, income and assets.
279
What is a loan commitment?
A formal notification from a lender stating that the borrower’s loan has been conditionally approved and specifying the terms under which the lender agrees to make the loan.
280
What is a pay stub?
Essentially proof of a paycheck. It’s a document that an employee receives with their paycheck that states their personal information including gross and net pay, current pay rate, number of hours worked for the pay period, any deductions.
281
What is a profit and loss (P&L) statement?
A financial statement that summarizes the company's income and expenses during a specified period, usually quarterly or fiscal year.
282
What is a down payment?
The amount a borrower pays upfront, that goes toward the purchase of a property, then the borrower will get the rest of the purchase in the form of a mortgage.
283
What is par interest rate?
A rate of interest on a loan for which the lender does not charge points (break-even).
284
What is debt?
A debt arrangement that gives the borrowing party permission to borrow money under the condition that it is to be paid back at a later date, usually with interest.
285
For all mortgage loans, the credit documents must be no more than How many days old on the note date?
4 months/120 days
286
What is Chapter 7 Bankruptcy?
Type of bankruptcy requiring that assets be used in exchange for the cancellation of debt. It is the simplest and most common type of bankruptcy. Chapter 7 bankruptcy can remain on a credit report for up to 10 years.
287
What is debt-to-income ratio (DTI)?
The percentage of your gross monthly income that goes to paying your monthly debt payments and is used by lenders to determine your borrowing risk.
To calculate DTI, change the T to a division sign (Debt divided by income).
288
What is the back end (Total Obligation Expense)?
Indicates what portion of a person's monthly income goes toward paying debts. Total monthly debt includes monthly expenses like PITI, credit card payments, child support, and other loan payments and revolving debt shown on the credit report. PITI + Debts / Gross Monthly Income = Total Obligation Expense ratio.
289
What is an underwriter?
Ensures that a loan applicant meets all of the requirements, and they conditionally approve or deny a loan. The underwriter is responsible to assess the borrower's risk
and the property.
290
What C of underwriting is the borrower’s ability to repay the loan based on the debt to income ratios?
Capacity
291
What C of underwriting is based on an analysis of the borrower’s credit report?
Credit/Character. Shows the borrowers payment history and the willingness to repay the loan.
292
What percent of ownership must self-employed borrowers have in the business?
25% of ownership in the business.
293
Lenders will look back how many months on mortgage or rent payments?
12 Months
294
What percentage of rental income from 1007 will the underwriter use?
0.75
295
What are some examples of public assistance income?
● Social security (self and on behalf of a dependent child)
● Department of Veterans' Affairs benefits (except Veteran's pension)
● Unemployment insurance compensation
● Workers' compensation
296
For retirement, pension income, child support and alimony to be considered as income it MUST continue beyond how many years of the application date?
3 years
297
Which form provides access to specific information regarding borrower-requested tax years?
IRS Form 4506-C
298
If a revolving debt does not show a minimum monthly payment amount, What % of the outstanding balance must be used as the monthly payment?
5% of the outstanding balance must be used as the monthly payment.
299
What are 5 ways to calculate Gross Monthly Income based on a borrower’s pay frequency?
● Annual Income divided by 12
● Weekly income multiplied by 52 weeks divided by 12
● Hourly rate multiplied by weekly hours worked x 52 weeks divided by 12
● Bi-weekly rate multiplied by 26 weeks divided by 12
● Bi-monthly rate multiplied by 24 weeks
divided by 12
300
What is a combined loan-to-value ratio (CLTV)?
A measure comparing the combined total amount owed on any mortgage (1st mortgage, 2nd mortgage) with the appraisal value or purchase price (whichever is lower). 1st mortgage plus 2nd mortgage divided by the appraisal value or purchase price (whichever is lower).
301
What are basis points?
An amount equal to 1/100th of a percentage point. For example, a fee calculated as 50 basis points on a $200,000 loan would be 0.50% or $1,000.
302
What are origination points?
Must be lumped together and are labeled as origination fees on the LE. The origination fee is paid at closing and is usually based on a percent of the loan amount 1% = 1 point=100 basis points (bps).
303
What is mortgage interest?
Paid in arrears, meaning each monthly payment covers the principal and interest for the preceding month.
304
How is the monthly interest rate calculated?
Loan amount x interest rate / 12
305
What is per-diem?
The amount of interest a borrower will pay for each day of the mortgage
306
What is prorated mortgage interest?
Paid by the borrower at closing, it is the daily interest multiplied by the number of days from settlement to the first day of the following month. Loan amount x interest rate / by 365 days.
307
What is an interest rate?
The amount charged on top of the principal by a lender to a borrower for taking out the loan. It can be locked-in or floated. This is the I in PITI.
308
What is a rate lock agreement?
A written agreement between the lender and the borrower. The borrower can rescind a lock agreement up until the written commitment is signed by the lender and sent to the
borrower.
309
The following details must be included in a gift letter?
● Donor’s name and contact information
● Address of property being purchased
● Donor and buyer’s relationship
● Gift amount
● Date of gift transfer
● A statement that repayment isn’t expected by the donor
● Donor’s bank, account number, and type of account
● Donor’s signature
310
Who investigates mortgage fraud?
FinCEN
311
What are the two broad categories that mortgage fraud is divided into?
Fraud for housing/ Fraud for profit
312
What is a fraud for profit?
Typical fraudulent activities associated with this category in the SAR filing sampling are: appraisal fraud; fraudulent flipping; straw buyers; and identity theft.
313
What is the database called that helps monitor and identify fraud, misrepresentation, and misconduct in the mortgage industry?
Mortgage Asset Research Institute (MARI)
314
What is loan flipping?
The process of convincing a homeowner to refinance a property with high fees and providing no net tangible benefit for the borrower.
315
What is illegal property flipping?
Occurs when property is purchased and resold quickly at an artificially inflated price, using a fraudulently inflated appraisal.
316
What are some examples of a builder bailout Scheme?
● Allowing the buyer to purchase with no money down
● The builder is willing to do anything to sell property
● Incentives to the buyer are added into the sales price, which then inflates the purchase price by using an inflated appraisal
317
What is flopping?
Occurs when a short sale is approved based on a misrepresentation of the value of the property.
318
What is a deed scam?
Occurs when someone steals the identity from the owner, then forged their signature, ultimately taking their title and then records the deed. Once that is done, they
mortgage the property for cash and walk away.
319
What is a silent second mortgage?
A second mortgage is placed on a property which will be used for down payment, which is not disclosed to the original lender on the first mortgage, which is why it is silent.
320
What is a straw seller?
A person who claims to have ownership in a property.
321
What is bait-and-switch?
Advertising a product which seems to be a bargain, with the intention of selling an inferior item in its place or showing more expensive items instead.
322
What is identity theft?
Can happen in many ways, but spamming and skimming are common. Spamming involves sending emails that are meant to trick them into providing their personal information to steal their identity. Skimming occurs when the credit card machines are used to copy a bank card that is used in the machine.
323
What are some examples of elder abuse?
● Forging checks
● Using someone else's retirement or Social Security benefits without their permission
● Charging a person's credit cards without their permission
● Withdrawing money from their bank accounts without their permission
● Changing names on a will, bank account, life insurance policy, or title to a house without permission
324
What is judicial foreclosure?
When the lender files a lawsuit to reclaim the property. This happens in lien theory states (mortgages)
325
Within how many days of a missed payment is the lender required to try to make contact with the borrower to inform or remind them that they are late on their mortgage payment?
Within 36 days
326
What are the 4 types of mortgage workout (loss mitigation) options?
● Loan modification
● Short sale
● Deed in Lieu of Foreclosure
● Forbearance
327
What is a short sale?
When the lender agrees to sell the home for less than what the borrower owes and the lender gets all the proceeds from the sale.
328
What is forbearance?
When the lender chooses not to take action against the borrower and will either pause the payments or forgive the payments for a certain period of time which allows the borrower to catch up and be current.
329
What is sent to the borrower on day 90 if there is no way to save the home with the workout options?
Breach Letter (Notice of Default)
330
What is the notice called that the lender can file with the courts to initiate a judicial foreclosure?
lis pendens
331
What are the two types of redemption periods?
● Equitable Right of Redemption
● Statutory Right of Redemption
332
What is the Statutory Right of Redemption?
Gives the borrower the opportunity to purchase back the home at the price the home sold for including any additional fees, after the foreclosure sale of the home (not all states have a statutory right of redemption)
333
What is exculpatory clause?
Protects the borrower by limiting the liability to only the property itself. If the borrower has an exculpatory clause, the lender or bank can only seize the property, they can not take any personal assets from the borrower. An Exculpatory Clause protects the borrower from a deficiency judgment.
334
What is the TOR formula when finding the DTI ratio?
PITI + debt / GMI
335
What is the formula used when solving for the most/max/highest the rate can go on an ARM loan?
Start rate + lifetime cap (S + C)
336
Discount points are calculated on what dollar value?
The loan amount
337
When labeling an ARM question, what does S represent?
Start rate/ intro rate/ teaser rate /initial rate - where the ARM Starts
338
When labeling an ARM question, what does M represent?
Margin
339
When labeling an ARM question, what does I represent?
Index (most current)
340
When labeling an ARM question, what does A represent?
Initial cap
341
When labeling an ARM question, what does B represent?
Periodic cap
342
When labeling an ARM question, what does C represent?
Lifetime cap
343
When labeling an ARM question, what does Y represent?
Certain year in time - note rate/nominal rate/current rate/previous adjustment
344
How many quarters are in a year?
4 - every 3 months
345
If you are paid bi-monthly, how many times a year are you paid?
24 times
346
When calculating per diem interest when you find the annual interest how many days do you divide it by?
365
347
When asked to find the UFMIP, what dollar amount is that calculated on?
Loan Amount
348
When solving for MIP on a FHA loan what is the MIP calculated on?
Loan Amount
349
When labeling an ARM equation, what do the following letters stand for: S, M, I A, B, C, Y?
● S - start rate/intro rate/teaser rate/initial rate (where the ARM starts)
● M - margin
● I - index (most current)
● A - intial cap
● B - period cap
● C - lifetime cap
● Y - year in time - note rate/nominal rate/current rate/previous adjustment
