National and UST Mortgage Practice Exam 5 - Wrong answers only|2023 LATEST UPDATE|GUARANTEED SUCCESS

Which of the following inquiries is considered lawful when asked for the purposes of credit approval as governed by ECOA? A. Years on the job B. Race C. Marital status D. Age The answer is: A. years on the job. ECOA protects against discrimination in credit transactions. Asking how many years someone has been at their job is not considered discriminatory. It is a gauge of income stability. The first step in the closing process is: A. Rescission B. Funding C. Application D. Steering The answer is: B. funding. The first step in the closing process is funding. This occurs when the lender wires funds to the title company or closing attorney. Once the closing has occurred, the title company is authorized to release funds to the parties (disbursement). Depending on state law and the type of transaction, disbursement could occur at closing or several days later For ARMS characterized by figures like "3/1," "5/1," "7/1," or "10/1," the first number represents _____, and the second number represents _____. A. The start rate; the periodic cap B. The locked term; the adjustment frequency C. The initial cap; the periodic cap D. The locked term; the adjustment cap The answer is: B. the locked term; the adjustment frequency. ARMS are often named for their features. In other words, a 3/1 ARM is locked for three years, and then adjusts annually each year thereafter. The first number represents the locked term and the second number represents the adjustment frequency. Creditors must make a(n) _____ of a borrower's ability to repay a loan. A. Probable, estimated determination B. Reasonable estimation C. Absolute guarantee D. Reasonable, good faith determination The answer is: D. reasonable, good faith determination. Creditors must make a reasonable, good faith determination of a borrower's ability to repay a loan. What was the first law that Congress enacted to combat predatory lending? A. TILA B. Fair Housing Act C. HOEPA D. RESPA The answer is: C. HOEPA. The Home Ownership and Equity Protection Act (HOEPA) was enacted in 1994 and was the first legislation specifically created to combat the practice of predatory lending. The FCRA places all of the following limitations on the inclusion of negative information in credit reports, EXCEPT: A. A limit on bankruptcies that are more than ten years old B. A limit on accounts placed for collection that are more than seven years old C. A limit on tax liens that are more than seven years old D. A limit on bankruptcies that are more than seven years old The answer is: D. a limit on bankruptcies that are more than seven years old. Most negative information that is more than seven years old is not included in a credit report; however, bankruptcies may be reported for up to ten years. Which of the following entities or individuals is responsible for determining financial responsibility requirements for state-licensed originators, lenders, or brokers? A. The NMLS B. The state regulator C. The governor D. The legislature The answer is: B. the state regulator. The NMLS consolidates and makes licensing records available to state regulators to use for licensing decisions. A balloon mortgage that includes a conditional refinance provision allows the borrower to: A. Request that the loan be refinanced and converted to a 30-year fixed-rate loan B. Rescind the transaction if the loan becomes too expensive C. Request modification of the terms of the loan when it reaches maturity D. Refinance the loan if he or she is in default The answer is: C. request modification of the terms of the loan when it reaches maturity. A balloon mortgage that includes a conditional refinance provision allows the borrower to request modification of the terms of the loan when it reaches maturity. When dealing with third-party service providers, banks and nonbanks must establish risk management programs that include all but which of the following elements? A. Conducting due diligence to assess the service providers' ability to comply with the law B. Entering contracts with service providers that include enforceable consequences for failing to comply with the law C. Establishing compensation programs that withhold payment for services until the service provider can demonstrate compliance with the law D. Reviewing the service provider's employee training programs, particularly for those employees that have direct contact with consumers The answer is: C. establishing compensation programs that withhold payment for services until the service provider can demonstrate compliance with the law. Establishing compensation programs to withhold payment for services is not a required element of a risk management program. A scenario in which a person forces the sale of a home at a much lower value than its true worth, then resells the home at its true value, is known as: A. Property flopping B. Property flipping C. Short sale D. Air loan The answer is: A. property flopping. A scenario in which a person forces the sale of a home at a much lower value than its true worth, then resells the home at its true value, is known as property flopping In order to comply with the advertising rules found in Regulation Z, creditors that advertise rates and payments for mortgages must: A. Make the required disclosures with equal prominence and in close proximity to the advertised rates or payments B. Use model forms C. Follow the rules for formatting advertisements that the CFPB prescribes D. Disclose all of the terms for the mortgage loan that the creditor is advertising The answer is: A. make the required disclosures with equal prominence and in close proximity to the advertised rates or payments. In order to comply with the advertising rules found in Regulation Z, creditors that advertise rates and payments for mortgages must make the required disclosures with equal prominence and in close proximity to the advertised rates or payments. Conforming loan guidelines generally include DTI ratios of: A. 26% / 38% B. 31% / 43% C. 28% / 41% D. 28% / 36% The answer is: D. 28% / 36%. The standard conforming DTI ratios for Fannie Mae and Freddie Mac are 28% (housing) and 36% (total debt). A state is conducting an examination of mortgage loan originator Basil Thyme. During the examination, the agency is authorized to do all of the following, except: A. Administer oaths or affirmations B. Control access to Basil's office C. Subpoena witnesses D. Require production of relevant documents The answer is: B. control access to Basil's office. In conducting an examination or investigation, the state licensing agency is authorized to administer oaths or affirmations; subpoena witnesses; require the production of relevant documents; and control access to any documents and records of any person under examination or investigation. If a borrower selects a mortgage loan covered by HOEPA, he or she: A. Can waive the three-day waiting period between the receipt of HOEPA disclosures and consummation of the loan after submitting a written request that is signed by the parties entitled to the waiting period and which describes the emergency and consent to the waiver B. Cannot waive the three-day waiting period between the receipt of HOEPA disclosures and consummation of the loan C. Can waive the three-day waiting period between the receipt of HOEPA disclosures and consummation of the loan with the creditor's approval D. Can waive the three-day waiting period between the receipt of HOEPA disclosures and consummation of the loan after signing a preprinted lender-provided form which states that the credit is needed to meet a bona fide personal emergency The answer is: A. Can waive the three-day waiting period between the receipt of HOEPA disclosures and consummation of the loan after submitting a written request that is signed by the parties entitled to the waiting period and which describes the emergency and consent to the waiver. If a borrower selects a mortgage loan covered by HOEPA, he/she can waive the three-day waiting period between the receipt of HOEPA disclosures and consummation of the loan after submitting a written request that is signed by the parties entitled to the waiting period and which describes the emergency and consent to the waiver. In a title theory state, title to residential real estate is granted with a _____, naming the lender as the beneficiary of the trust, the borrower as the trustor, and the third party that holds the deed until the loan is fully paid as the _____. A. Mortgage / assignee B. Deed of trust / assignor C. Mortgage / trustor D. Deed of trust / trustee The answer is: D. deed of trust / trustee. In a title theory state, title to residential real estate is granted with a deed of trust, naming the lender as the beneficiary of the trust, the borrower as the trustor, and the third party that holds the deed until the loan is fully paid as the trustee.