HUD CERTIFICATION EXAMINATION SET QUESTIONS
AND ANSWERS GRADED A+
✔✔Earnest Money - ✔✔When an agreement on price is reached the buyer will give the
real estate agent a check typically 1%-10% of the sales price, it can be negotiated to
prove the seriousness of the intent to purchase the home.
✔✔Implied Warranty - ✔✔An unspoken, unwritten promise that a product is fit to be sold
and used for its intended purpose, which usually applies unless the product is sold "as-
is"
✔✔Installing a Manufactured Home - ✔✔1. Transporting a home
2. Building a foundation
3. Leveling the home
4. Securing the home to the foundation
5. Finishing the home (enclosing the crawl space, joining carpet etc)
6. Connecting utilities
✔✔Pre-Approval - ✔✔A lender commits to lend a fixed loan amount based on the
review of a loan application, credit report, debt, savings, and a review by an underwriter.
✔✔Pre-Qualified - ✔✔Pre-qualification it is based on a conversation, there is no cost,
underwriting process or commitment.
✔✔Loan Origination Fees - ✔✔A charge by the lender to cover the administrative costs
of making the mortgage. Paid at closing and varies based on the type of loan, however
typically 1-2% of the mortgage amount.
✔✔Total Loan Cost - ✔✔Basic interest rate + the loan origination fees + discount
points. The annual percentage rate (APR) is a reflection of the total loan cost and can
be used as a simple tool to compare mortgages.
✔✔Discount Points - ✔✔A type of pre-paid interest normally paid at closing and
generally calculated to be equivalent to 1% of the total loan amount. The borrower pays
them to reduce the interest rate on a loan and lower monthly mortgage payments.
Lender-determined.
✔✔HOA - ✔✔Home Owners Association
✔✔ROC - ✔✔Resident-Owned Communities
-Usually taxed and titled as real property
-Less likely that there will be lot fee hikes
✔✔APR - ✔✔Annual Percentage Rate
,✔✔GSE Loan or Mortgage - ✔✔A government-sponsored enterprise or GSE, is a
financial services entity created by congress. A GSE Loan or mortgage refers to
mortgage owned by Fannie Mae or Freddy Mac.
✔✔ECOA - ✔✔Equal Credit Opportunity Act
Prevents discrimination in credit based on: Race, Color, Religion, National Origin, Age,
Sex, Marital Status or Receipt of Income from Public Assistance Programs.
Complaint to: Federal Trade Commission (FTC)
✔✔RESPA - ✔✔Real Estate Settlement Procedures Act
-Prohibits abusive practices that increase settlement costs (ex: requiring home buyers
to buy title insurance from specific companies)
-Prohibits kickbacks for settlement business referrals
-Covers required mortgage transaction disclosures
*exception: Manufactured homes loans unless mortgaged as real property
Complaint to: Consumer Finance Protection Bureau (CFPB)
✔✔TILA - ✔✔Truth In Lending Act
-Requires lenders to disclose loan cost info to borrowers for comparison shopping
- Ability to Repay / Qualified Mortgage (ATR/QM) rule: lenders must ensure borrower
can repay (considering income, assets, credit, etc.
-Qualified mortgage (QM) criteria: no risky features (interest only payments), fees <=
3% of loan, loan terms <= 30 years.
*exception: Certain nonprofit loans for low-to-moderate income consumers
*Manufactured homes classified as personal property eligible if borrowers principal
residence.
Complaint to: Federal Trade Commission (FTC)
✔✔TRID - ✔✔TILA-RESPA Integrated Disclosure (Know Before You Owe Rule)
-Merged Good Faith Estimate (GFE) and Truth-in-Lending Disclosures into Loan
Estimate
Merged HUD - Settlement Statement and final TIL into Closing Disclosure
-Easier-to-read forms for borrowers
*exception: Does not apply to manufactured loans unless considered real property.
Complaint to: Consumer Finance Protection Bureau (CFPB)
✔✔Loan Estimate - ✔✔Must be provided within 3 business days of loan application
Key features
, -Loan Terms
-Costs at Closing
-Adjustable Payment Table
-Adjustable Interest Rate Table
-Contact Information
-Other Considerations
-Buyer's Signature Requirement
✔✔Closing Disclosure - ✔✔Must be provided at least 3 business days before closing
Key features
-Generally must contain the actual terms and costs of the transaction
-Final Loan Terms
-Final Costs at Closing
-Cash to Close
-Summary of Transactions
-Additional Information about the Loan
-Final Adjustment Payment Table
Final Adjustable Interest Rate Table
-Loan Calculations
-Other Disclosures
-Contact Information
✔✔Costs that Cannot Increase (Loan Estimate to Closing Disclosure) - ✔✔-Fees paid
to lender, mortgage broker or affiliates
-Fees for required services borrower could not shop for
-Tranfer Taxes
✔✔Costs that Can Increase (Loan Estimate to Closing Disclosure) - ✔✔-Up to 10%:
Services chosen from the lenders provider list, government recording charges.
-Can increase without limit: Prepaid interest, insurance premiums, escrow deposits,
third party service fees not required by lender.
✔✔FHFA - ✔✔Federal Housing Finance Agency
✔✔HOEPA - ✔✔Home Ownership and Equity Protections Act
-Protects against abusive practices in high-cost loans
-Loans covered if:
*ARP exceeds Treasury rates by 6.5% for first lien, 8.5% for junior liens 8.5% for first
lien less than 50k and secured by personal property
*Fees and points exceed 5% of the loan amount or fixed annual amount.
-Requires:
*3 day prior disclosure with APR payment amount and consequences of default
*Warning about losing home due to non-payment
*Special disclosures for variable-rate loans
-Prohibited practices:
AND ANSWERS GRADED A+
✔✔Earnest Money - ✔✔When an agreement on price is reached the buyer will give the
real estate agent a check typically 1%-10% of the sales price, it can be negotiated to
prove the seriousness of the intent to purchase the home.
✔✔Implied Warranty - ✔✔An unspoken, unwritten promise that a product is fit to be sold
and used for its intended purpose, which usually applies unless the product is sold "as-
is"
✔✔Installing a Manufactured Home - ✔✔1. Transporting a home
2. Building a foundation
3. Leveling the home
4. Securing the home to the foundation
5. Finishing the home (enclosing the crawl space, joining carpet etc)
6. Connecting utilities
✔✔Pre-Approval - ✔✔A lender commits to lend a fixed loan amount based on the
review of a loan application, credit report, debt, savings, and a review by an underwriter.
✔✔Pre-Qualified - ✔✔Pre-qualification it is based on a conversation, there is no cost,
underwriting process or commitment.
✔✔Loan Origination Fees - ✔✔A charge by the lender to cover the administrative costs
of making the mortgage. Paid at closing and varies based on the type of loan, however
typically 1-2% of the mortgage amount.
✔✔Total Loan Cost - ✔✔Basic interest rate + the loan origination fees + discount
points. The annual percentage rate (APR) is a reflection of the total loan cost and can
be used as a simple tool to compare mortgages.
✔✔Discount Points - ✔✔A type of pre-paid interest normally paid at closing and
generally calculated to be equivalent to 1% of the total loan amount. The borrower pays
them to reduce the interest rate on a loan and lower monthly mortgage payments.
Lender-determined.
✔✔HOA - ✔✔Home Owners Association
✔✔ROC - ✔✔Resident-Owned Communities
-Usually taxed and titled as real property
-Less likely that there will be lot fee hikes
✔✔APR - ✔✔Annual Percentage Rate
,✔✔GSE Loan or Mortgage - ✔✔A government-sponsored enterprise or GSE, is a
financial services entity created by congress. A GSE Loan or mortgage refers to
mortgage owned by Fannie Mae or Freddy Mac.
✔✔ECOA - ✔✔Equal Credit Opportunity Act
Prevents discrimination in credit based on: Race, Color, Religion, National Origin, Age,
Sex, Marital Status or Receipt of Income from Public Assistance Programs.
Complaint to: Federal Trade Commission (FTC)
✔✔RESPA - ✔✔Real Estate Settlement Procedures Act
-Prohibits abusive practices that increase settlement costs (ex: requiring home buyers
to buy title insurance from specific companies)
-Prohibits kickbacks for settlement business referrals
-Covers required mortgage transaction disclosures
*exception: Manufactured homes loans unless mortgaged as real property
Complaint to: Consumer Finance Protection Bureau (CFPB)
✔✔TILA - ✔✔Truth In Lending Act
-Requires lenders to disclose loan cost info to borrowers for comparison shopping
- Ability to Repay / Qualified Mortgage (ATR/QM) rule: lenders must ensure borrower
can repay (considering income, assets, credit, etc.
-Qualified mortgage (QM) criteria: no risky features (interest only payments), fees <=
3% of loan, loan terms <= 30 years.
*exception: Certain nonprofit loans for low-to-moderate income consumers
*Manufactured homes classified as personal property eligible if borrowers principal
residence.
Complaint to: Federal Trade Commission (FTC)
✔✔TRID - ✔✔TILA-RESPA Integrated Disclosure (Know Before You Owe Rule)
-Merged Good Faith Estimate (GFE) and Truth-in-Lending Disclosures into Loan
Estimate
Merged HUD - Settlement Statement and final TIL into Closing Disclosure
-Easier-to-read forms for borrowers
*exception: Does not apply to manufactured loans unless considered real property.
Complaint to: Consumer Finance Protection Bureau (CFPB)
✔✔Loan Estimate - ✔✔Must be provided within 3 business days of loan application
Key features
, -Loan Terms
-Costs at Closing
-Adjustable Payment Table
-Adjustable Interest Rate Table
-Contact Information
-Other Considerations
-Buyer's Signature Requirement
✔✔Closing Disclosure - ✔✔Must be provided at least 3 business days before closing
Key features
-Generally must contain the actual terms and costs of the transaction
-Final Loan Terms
-Final Costs at Closing
-Cash to Close
-Summary of Transactions
-Additional Information about the Loan
-Final Adjustment Payment Table
Final Adjustable Interest Rate Table
-Loan Calculations
-Other Disclosures
-Contact Information
✔✔Costs that Cannot Increase (Loan Estimate to Closing Disclosure) - ✔✔-Fees paid
to lender, mortgage broker or affiliates
-Fees for required services borrower could not shop for
-Tranfer Taxes
✔✔Costs that Can Increase (Loan Estimate to Closing Disclosure) - ✔✔-Up to 10%:
Services chosen from the lenders provider list, government recording charges.
-Can increase without limit: Prepaid interest, insurance premiums, escrow deposits,
third party service fees not required by lender.
✔✔FHFA - ✔✔Federal Housing Finance Agency
✔✔HOEPA - ✔✔Home Ownership and Equity Protections Act
-Protects against abusive practices in high-cost loans
-Loans covered if:
*ARP exceeds Treasury rates by 6.5% for first lien, 8.5% for junior liens 8.5% for first
lien less than 50k and secured by personal property
*Fees and points exceed 5% of the loan amount or fixed annual amount.
-Requires:
*3 day prior disclosure with APR payment amount and consequences of default
*Warning about losing home due to non-payment
*Special disclosures for variable-rate loans
-Prohibited practices:
