Where credit institutions originate loans - ANSWER Primary Mortgage Market
When an ARM has rate caps of 5/2/6, the 6 refers to what?
A. The maximum rate increase at the initial adjustment
B. The start rate for the loan
C. The maximum the rate can increase over the life of the loan
D. The rate maximum the rate can decrease over the life of the loan - ANSWER C. The
maximum the rate can increase over the life of the loan
When utilizing a temporary buydown to lower the interest rate on a FHA loan, which of the
following are correct
A. The borrower qualified at the note rate
B. The borrower qualified at the buydown rate
C. The rate cannot be more than 2% below the note rate
D. Seller or builder can pay the discount points to buydown the rate - ANSWER B. The
borrower qualified at the buydown rate
All of the following are violations of the Fair Housing Act EXCEPT
A. Age
B. National Origin
C. Disability
D.Religion - ANSWER A. Age
1
,Claim against property held by one who is not the legal owner - ANSWER Encrum-
brance
Advertised term that requires additional disclosures - ANSWER Trigger Term
An advertisement must be presented "clearly and conspicuously" to keep from being decep-
tive, unfair, or otherwise violate a Commission rule - ANSWER Advertising Disclosure
Extenuating circumstances such as "bona fide personal financial emergency - AN-
SWER Waving Right of Rescission
Right that borrowers have to cancel a loan or line of credit with a lender within three days of
closing - ANSWER Right of Rescission
When creditors office is open to the public, a calendar working day except Sunday or a fed-
eral holiday - ANSWER Business Day
Financial information used for purposes of obtaining an extension of credit - AN-
SWER Application
The act of making new information known - ANSWER Disclosure
Mission is to promote consumer protection and eliminate and prevent anticompetitive busi-
ness practices - ANSWER FTC
Federal Trade Commission
Regulatory agency charged with overseeing financial products and services offered to con-
sumers - ANSWER CFPB
Consumer Financial Protection Bureau
2
,Enacted 1968 promotes the informed use of consumer credit by requiring disclosures about
terms and costs and standardizes the manner in which costs with borrowing are calculated
and disclosed - ANSWER TILA
Truth in Lending Act
Interest charged on a loan for one or more days - ANSWER Per Diem Interest
Principal (X) Interest Rate = Annual Interest Rate - ANSWER Annual Interest Rate For-
mula
Mortgage where the mortgagor is only required to pay off the interest that arises from the
principal that is borrowed for a set period - ANSWER Interest Only Mortgage
Borrower chooses to pay additional "discount points" to buy down the interest rate for the
life of the mortgage note - ANSWER Permanent Buydown
Used on fixed rate loans over two years
Set of two initial temporary-start interest rates that increase in stair-step fashion until a per-
manent interest rate is reached - ANSWER 2/1 Buydown
A form of pre-paid interest which effectively increases the yield on the loan above the
amount of the stated interest rate - ANSWER Discount Point
An amount in addition to the Loan to Value, which simply represents the first position mort-
gage or loan as a percentage of the property's value - ANSWER CLTV
Combined Loan to Value
Ratio of a loan to the value of an asset purchased - ANSWER LTV
Loan to Value
3
, Principal, Interest, Taxes, Insurance
Refers to the components of a mortgage payment - ANSWER PITI
Housing to Debt
Ratio that measures an individual's ability to manage monthly payment and repay debts -
ANSWER DIF
Agreement between the lender and the borrower to delay foreclosure - ANSWER For-
bearance
A permanent restructuring of the mortgage where one or more of the terms of a borrower's
loan are changed to provide a more affordable payment - ANSWER Loan Modification
Legal process to collect debt on mortgaged property - ANSWER Foreclosure
Document generated and signed by a mortgage lender, acknowledging that the borrower
has paid off the mortgage loan in full and the mortgage is not a lien on the property - AN-
SWER Satisfaction of Mortgage Letter
When two mortgages are on a property, this specifies which mortgage takes precedence -
ANSWER Subordination Agreement
Provides homeowner proof the mortgage is paid off - ANSWER Payoff Statement
Legal presumption that anything recorded in a public record can be known by anyone - AN-
SWER Constructive Note
Direct knowledge that one has of the property - ANSWER Actual Note
4
When an ARM has rate caps of 5/2/6, the 6 refers to what?
A. The maximum rate increase at the initial adjustment
B. The start rate for the loan
C. The maximum the rate can increase over the life of the loan
D. The rate maximum the rate can decrease over the life of the loan - ANSWER C. The
maximum the rate can increase over the life of the loan
When utilizing a temporary buydown to lower the interest rate on a FHA loan, which of the
following are correct
A. The borrower qualified at the note rate
B. The borrower qualified at the buydown rate
C. The rate cannot be more than 2% below the note rate
D. Seller or builder can pay the discount points to buydown the rate - ANSWER B. The
borrower qualified at the buydown rate
All of the following are violations of the Fair Housing Act EXCEPT
A. Age
B. National Origin
C. Disability
D.Religion - ANSWER A. Age
1
,Claim against property held by one who is not the legal owner - ANSWER Encrum-
brance
Advertised term that requires additional disclosures - ANSWER Trigger Term
An advertisement must be presented "clearly and conspicuously" to keep from being decep-
tive, unfair, or otherwise violate a Commission rule - ANSWER Advertising Disclosure
Extenuating circumstances such as "bona fide personal financial emergency - AN-
SWER Waving Right of Rescission
Right that borrowers have to cancel a loan or line of credit with a lender within three days of
closing - ANSWER Right of Rescission
When creditors office is open to the public, a calendar working day except Sunday or a fed-
eral holiday - ANSWER Business Day
Financial information used for purposes of obtaining an extension of credit - AN-
SWER Application
The act of making new information known - ANSWER Disclosure
Mission is to promote consumer protection and eliminate and prevent anticompetitive busi-
ness practices - ANSWER FTC
Federal Trade Commission
Regulatory agency charged with overseeing financial products and services offered to con-
sumers - ANSWER CFPB
Consumer Financial Protection Bureau
2
,Enacted 1968 promotes the informed use of consumer credit by requiring disclosures about
terms and costs and standardizes the manner in which costs with borrowing are calculated
and disclosed - ANSWER TILA
Truth in Lending Act
Interest charged on a loan for one or more days - ANSWER Per Diem Interest
Principal (X) Interest Rate = Annual Interest Rate - ANSWER Annual Interest Rate For-
mula
Mortgage where the mortgagor is only required to pay off the interest that arises from the
principal that is borrowed for a set period - ANSWER Interest Only Mortgage
Borrower chooses to pay additional "discount points" to buy down the interest rate for the
life of the mortgage note - ANSWER Permanent Buydown
Used on fixed rate loans over two years
Set of two initial temporary-start interest rates that increase in stair-step fashion until a per-
manent interest rate is reached - ANSWER 2/1 Buydown
A form of pre-paid interest which effectively increases the yield on the loan above the
amount of the stated interest rate - ANSWER Discount Point
An amount in addition to the Loan to Value, which simply represents the first position mort-
gage or loan as a percentage of the property's value - ANSWER CLTV
Combined Loan to Value
Ratio of a loan to the value of an asset purchased - ANSWER LTV
Loan to Value
3
, Principal, Interest, Taxes, Insurance
Refers to the components of a mortgage payment - ANSWER PITI
Housing to Debt
Ratio that measures an individual's ability to manage monthly payment and repay debts -
ANSWER DIF
Agreement between the lender and the borrower to delay foreclosure - ANSWER For-
bearance
A permanent restructuring of the mortgage where one or more of the terms of a borrower's
loan are changed to provide a more affordable payment - ANSWER Loan Modification
Legal process to collect debt on mortgaged property - ANSWER Foreclosure
Document generated and signed by a mortgage lender, acknowledging that the borrower
has paid off the mortgage loan in full and the mortgage is not a lien on the property - AN-
SWER Satisfaction of Mortgage Letter
When two mortgages are on a property, this specifies which mortgage takes precedence -
ANSWER Subordination Agreement
Provides homeowner proof the mortgage is paid off - ANSWER Payoff Statement
Legal presumption that anything recorded in a public record can be known by anyone - AN-
SWER Constructive Note
Direct knowledge that one has of the property - ANSWER Actual Note
4
