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25 Cards in this Set
- Front
- Back
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“MIP” stands for: |
Mortgage interest premium Minimum interest payment Mortgage insurance premium Monthly insurance premium The answer is mortgage insurance premium. Mortgage insurance premium is used for FHA loans and is required both upfront and annually (for most FHA loans). |
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Mary and Larry are purchasing a house for $198,000. They are making a down payment of $20,000, and they are approved for a conforming loan. How much should they expect to receive in seller help if the seller agrees to contribute the maximum amount? |
$5,940 $10,680 $12,440 $11,880 The answer is $11,880. For a conforming loan, the max seller contribution in this scenario is 6% (the down payment is more than 10%). The 6% is taken from the purchase price of $198,000, which is $11,880. |
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Oskar is being licensed in a state that requires each loan originator to be covered by a surety bond. Upon approval of his license application, he will be employed by the Half Nelson Mortgage Brokerage. Who is required to provide Oskar’s surety bond? |
Oskar Half Nelson Mortgage Brokerage Both Oskar and Half Nelson Either Oskar or Half Nelson The answer is Either Oskar or Half Nelson. Each mortgage loan originator must be covered by a surety bond. If he/she is an employee or exclusive agent of a person subject to the state’s SAFE Act, the surety bond of the employing licensee or exempt person may be used to satisfy the loan originator surety bond requirement |
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Which of the following fees may a creditor charge before offering disclosures to a loan applicant? |
Application fee Credit reporting fee Appraisal fee Broker fee The answer is credit reporting fee. A credit report fee is the only fee that a creditor may charge before offering disclosures to a loan applicant |
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A mortgage broker and a title insurance company have common ownership and are considered affiliated businesses under RESPA. If either of these companies refers a consumer to the other, the consumer must receive a(n): |
Affiliated Business Determination Affiliated Business Arrangement Disclosure Business Agreement Disclosure Business Control Disclosure The answer is Affiliated Business Arrangement Disclosure. An Affiliated Business Arrangement Disclosure is required anytime a business refers another business with whom it has some common ownership or some other affiliation |
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The VA has stated that loans made in compliance with VA standards and guaranteed or insured by the VA are |
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Small creditor qualified mortgages Safe harbor qualified mortgages Non-qualified mortgages Exempt from qualified mortgage standards The answer is safe harbor qualified mortgages. The VA has stated that loans made in compliance with VA standards and guaranteed or insured by the VA are safe harbor qualified mortgages. |
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Which of the following is defined as the difference between the fair market value of a property and the current balances of any liens against the property? |
Amortization Equity Finance charge Debt-to-income ratio The answer is equity. Equity is defined as the difference between the fair market value of a property and the current balances of any liens against the property |
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A borrower who owns more than ____ of a business must submit up to two years’ tax returns in providing income documentation |
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15% 25% 10% 5% The answer is 25%. A borrower who owns more than 25% of a business must submit up to two years’ tax returns in providing income documentation |
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Ginger is a mortgage loan originator. She discussed with her clients, the Salts, the requirement to carry property insurance on their home that was securing the mortgage loan Ginger was originating for them. Her recommendation was that they insure the property for an amount exceeding the replacement value of the improvements on the property. What excess amount is Ginger permitted to recommend? |
Recommending insurance in excess of the replacement value of the improvements is prohibited 110% of replacement value 120% of replacement value 150% of replacement value The answer is recommending insurance in excess of the replacement value of the improvements is prohibited. It is prohibited for any person, when engaging in loan origination activity, to cause or require a borrower to obtain property insurance coverage in an amount that exceeds the replacement value of the improvements as established by the property insurer |
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The general purpose of borrower credit is to: |
Allow a broker to spread closing costs evenly between borrower and lender Allow the lender to minimize the fees they charge Provide the broker with an additional source of income Help the borrower cover or reduce the costs of settlement The answer is help the borrower cover or reduce the costs of settlement. The general purpose of borrower credit is to help the borrower by subsidizing closing costs by choosing to lock a loan at a slightly higher rate than par. |
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The time at which a consumer becomes contractually obligated on a credit transaction is: |
Application Consummation Upon receiving a Loan Estimate Upon receiving a Closing Disclosure The answer is consummation. Consummation is the time at which a consumer becomes contractually obligated on a credit transaction |
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Increasing loan balances resulting from the application of periodic payments that are not sufficient to cover the interest that is due create which of the following for borrowers? |
Negative equity Negative amortization Lower credit scores Amortizing payments The answer is negative amortization. Increasing loan balances resulting from the application of periodic payments that are not sufficient to cover the interest that is due create negative amortization. |
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If a lender wants to obtain copies of a borrower’s tax returns, the borrower is asked to sign what? |
A waiver of financial information 4506-T 1003 IRS-1040 The answer is 4506-T. The IRS form 4506-T is used to allow a lender to pull a transcript of the borrower’s tax returns. |
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The amount of income left over after debt is subtracted is called: |
Residual income Debt ratio Discretionary spending Debt inverse The answer is residual income. Residual income is money left over after debt is subtracted. |
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Lisa is submitting an application for a mortgage loan originator license. In order to be able to apply, Lisa must complete how many hours of pre-licensing education? |
20 8 15 30 The answer is 20. An applicant for a mortgage loan originator license must satisfactorily complete a pre-licensing course of study that includes at least 20 hours of NMLS-reviewed and -approved education. |
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An originator uses a contracted processor who charges $500 per file. The fee disclosed to the borrower for processing is $800, a difference of $300 which the originator keeps for himself. This is: |
A unilateral markup, which is legal, but may be a violation of RESPA’s prohibition against unearned fees A violation of RESPA’s prohibition against fee-splitting Permitted only as long as receipts are kept from the processor for five years A violation of ECOA The answer is a unilateral markup, which is legal, but may be a violation of RESPA’s prohibition against unearned fees. RESPA requires compensation for settlement services to be earned. Any compensation not in direct correlation with an actual service is likely a violation. However, according to a 2012 case, the act of unilaterally marking up a fee and retaining the additional earnings is not illegal, as long as fee-splitting is not involved. |
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For the purposes of issuing a revised Loan Estimate, “changed circumstances” that affect estimated settlement charges must result in a change to those charges of more than: |
5% 1% Any amount 10% The answer is 10%. For the purposes of issuing a revised Loan Estimate, “changed circumstances” that affect estimated settlement charges must result in a change to those charges of more than 10%.
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Safe harbor qualified mortgages offer a “safe harbor” from: |
Liability for TRID Rule violations Liability for ATR Rule violations Liability for ECOA violations Liability for HOEPA violations The answer is liability for ATR Rule violations. The Qualified Mortgage Rule extends a safe harbor from liability for ATR Rule violations. The safe harbor is for loans that meet qualified mortgage standards. |
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Of the following qualifying pieces of information, which carries the highest risk of being fraudulent? |
Tax transcripts obtained through the execution of a 4506-T Social Security Numbers cross-checked against credit reports Faxed or Internet documents Original copies of a borrower’s W-2s and paystubs The answer is faxed or Internet documents. Documentation and verification is perhaps the most important step in the qualifying process. Careful examination of all supporting documents is critical to preventing fraud. |
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Overtime income may be considered for an hourly employee if: |
It has been consistent for at least two years and is likely to continue It is being paid in the same paycheck The earnings have been reported as wages It has been consistent for less than two years and is likely to continue The answer is it has been consistent for at least two years and is likely to continue. Overtime income is only considered if it has been consistent for at least two years, and the employer verifies that it is likely to continue. |
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Loan originator Zena Mendez is preparing an advertisement in which more than one simple interest rate will apply over the term of the loan. In order to be in compliance with Regulation Z, Zena must clearly and conspicuously disclose all of the following, except: |
Each applicable simple annual rate The period of time each simple annual rate applies The frequency with which the rate will change The annual percentage rate for the loan The answer is the frequency with which the rate will change. If an ad states a simple annual rate of interest and more than one simple annual rate of interest will apply over the term of the loan, the ad must clearly and conspicuously disclose each applicable simple annual interest rate, the period of time during which each rate will apply, and the annual percentage rate for the loan |
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An underwriter examines what two main aspects of a loan application to determine if lender guidelines are being met? |
Applicant and credit Credit and income Credit and collateral Applicant and collateral The answer is applicant and collateral. An underwriter must make a determination as to whether both the applicant and the subject property meet the guidelines of the investor |
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XYZ Mortgage Company just mailed a Closing Disclosure to a consumer. The waiting period prior to closing will begin: |
On the date that the Closing Disclosure is mailed The next business day after the Closing Disclosure is mailed The third business day after the Closing Disclosure is mailed The day on which the company received a completed, signed loan application The answer is the third business day after the Closing Disclosure is mailed. The waiting period prior to closing will begin on the third business day after the Closing Disclosure is mailed |
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As a result of the Housing and Economic Recovery Act of 2008, Congress created the _____ for oversight of the GSEs. |
FNMA FinCEN FHLMC FHFA The answer is FHFA. HERA created and installed the FHFA (Federal Housing Finance Agency) as the conservator of the GSEs (Fannie Mae and Freddie Mac). The FHFA’s powers include the responsibility to set the conforming loan limits from year to year. |
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Homeownership counseling is required for the following types of lending transactions, except: |
Fixed-rate qualified mortgages High-cost mortgages FHA HECM loans Negative amortization loans The answer is fixed-rate qualified mortgages. Homeownership counseling is required for high-cost mortgages, FHA HECM loans, and negative amortization loans. |
