Unit 4

Question 1

Conforming and non-conforming Mortgage Loans require PMI if…

Answer 1

• The LTV is higher than 80%

Equity = less than 20%

Question 2

Conventional mortgages use ___ to guarantee/insure/indemnify/protect their loans investment

Answer 2

PMI - Private Mortgage Insurance

Question 3

A downpayment of 20% or more helps a homebuyer avoid…

Answer 3

PMI - Private Mortgage Insurance

Question 4

The setting of the PMI amount is also called…

Answer 4

Casting

Question 5

For FHA loans…if LTV is less than or equal to 90.00%, the max MIP (FHA’s version of PMI) requirement is…

Answer 5

11 years

Question 6

For FHA loans, if LTV is over 90%, MIP is…

Answer 6

MIP is required for the full length of the term

Question 7

Requirements to cancel PMI

Answer 7

Borrower…

• LTV must be at least 80%
• all payments on time
• no decrease in value since loan close
• no new liens on title since loan close
• covering costs to verify info through appraisal/title work

Question 8

When is the lender obligated to remove PMI?

Answer 8

When the Bor reaches an LTV of 78%

Question 9

What are the two names for the Act that allows borrowers to have their PMI requirement removed?

Answer 9

• HPA: Homeowners Protection Act
• PMI Cancellation Act

(PMI = Private Mortgage Insurance)

Question 10

Cost for FHA’s UFMIP

Answer 10

1.75%

Question 11

How are basis points written?

Ex: 80bps

Answer 11

1% of 1%…

80 bps = 0.0080

Question 12

Do VA loans have PMI?

Answer 12

No - they have a GUARANTY

Question 13

How is a VA loan guaranty calculated?

Answer 13

If the VA loan doesn’t have a downpayment, a funding fee is needed to establish a guaranty

2.15% of the loan amount

Question 14

EDIT What does a VA loan use instead of PMI insurance?

How is it calculated?

Answer 14

EDIT - An entitlement and guaranty

• If the VA loan doesn’t have a downpayment, a funding fee is needed to establish a guaranty
  2. 15% of the loan amount