997 NMLS Questions with Answers

997 NMLS Questions with Answers The practice of getting people to sell their homes at bargain prices by suggesting that certain ethnic groups are going to move into the area is nicknamed: -Price fixing -Redlining -Steering -Blockbusting>>>> Blockbusting You and the borrower believe an Adjustable Rate Mortgage would be best for the borrower. What is the name of the booklet you are required to give? -CHARM Booklet -ARM Disclosure -Fair Lending Practices Booklet -RESPA Booklet>>>> CHARM Booklet How many days in advance of transferring a loan to another lender must the current mortgage servicer inform that customer of the transfer to another lender who will subsequently be servicing the loan? -15 -20 -35 -45>>>> 15 After meeting with the borrowers to complete a loan application, you return to your office and order a Tri-Merged credit report. Now that you have a credit report, what Loan Disclosure must you now prepare and mail (or give) to them? -Notice to Home Loan Applicant -Credit Authorization Consent -Denial Letter -Rapid Rescore>>>> Notice to Home Applicant In a face-to-face application, what do you do if the borrower refuses to fill out the race, ethnicity and gender section on Section X of the 1003? -Continue with the loan application, but be sure to get the information completed before submitting the loan to the underwriter. -Process and complete the loan entirely without the information. -Use your best guess and complete the information in Section X of the 1003. -End the application process.>>>> Use your best guess and complete the information in Section X of the 1003. Which is not part of the original loan application? -Borrower's marital status -ECOA disclosure -Borrower provided ethnicity -Borrower provided birth date>>>> ECOA disclosure Which is not an application disclosure? -Servicing disclosure -Environmental hazard disclosure -Appraisal disclosure -APR disclosure>>>> Environmental hazard disclosure Regarding Mortgage Servicing Transfers, what are the number of days that the current mortgage servicer must inform that customer prior to transferring the loan to another lender - who will subsequently service that loan. How many days prior to this loan transfer does the current mortgage servicer have to inform the customer? -15 -20 -3 -45>>>> 15 What is not likely to happen if the lender/investor finds fraud? -A 1% interest rate increase on the loan -The lender and/or broker will be required to repurchase the loan -The entire loan can be called due and payable -The loan officer must pay back any premium made on the loan>>>> A 1% interest rate increase on the loan What is the maximum penalty for providing false information on a federally related loan? -$5,000 fine and one year jail time -$250,000 fine and 30 years jail time -Revoke license and $1,000 fine -Up to $1,000,000 fine and jail time>>>> Up to $1,000,000 fine and jail time What law requires the lender to collect borrower information for first mortgages and home improvement loans? -HOEPA -TILA -ECOA -HMDA>>>> HMDA HMDA requires the lenders to obtain which of the following information for each borrower? -Age and Race -Race and Sex -Marital status and Sex -Marital status and Age>>>> Race and Sex Providing a referral fee to a realtor is? -An acceptable practice -An illegal practice -An acceptable practice as long as it is a fair price for services actually provided -Acceptable only if fully disclosed>>>> An illegal practice What are the penalties for giving a referral fee to a realtor?-There are no penalties. -$10,000 per incident and up to one year in jail -$100,000 plus up to 30 years in jail -$1,000,000 plus up to one year in jail>>>> $10,000 per incident and up to one year in jail What are the penalties for violating Section 8 of RESPA? -$5,000 per incident and up to one year in jail -$10,000 per incident plus one year jail time -$100,000 plus up to 30 years in jail -$1,000,000 plus up to one year in jail>>>> $10,000 per incident plus one year jail time Which of the following does RESPA require on a purchase? -Lead paint notice -A 1008 -APR disclosure -Settlement cost booklet>>>> Settlement cost booklet Aggregate escrow requires that the borrower have which of the following? -$0 in the account or no more than 2 months impounds in reserves -$0 in account, or no more than 1 month impound in reserves -No more than 1% of the principal balance of the loan maximum in the impound account -$100 and no impound reserves>>>> $0 in the account or no more than 2 months impounds in reserves What is the minimum amount of time that a lender has to inform the borrower that they are transferring servicing? -15 days -45 days -10 days -60 days>>>> 15 days A yield spread premium is disclosed on which document? -TIL disclosure -Good faith estimate -Servicing disclosure -Rescission disclosure>>>> Good faith estimate Which is the primary law that affects mortgage loan closings? -TILA -ECOA -RESPA -HMDA>>>> RESPA If a loan officer were to take a loan application Tuesday at 1:00 p.m., what is the last day that the good faith estimate must be mailed or disclosed? -The same day, Tuesday before end of business -The next day, Wednesday before 5pm -Friday before midnight -Within 3 days before 5pm>>>> Friday before midnight If you are a lender, it is acceptable to REQUIRE the services of a specific provider: -if you have no ownership interest in the provider. -if the other service provider is an affiliate. -as long as you provide the borrower with the appropriate disclosure within three business days of the loan application. -only if the service provider is licensed.>>>> if you have no ownership interest in the provider. RESPA imposes requirements about or prohibits all of the following except: -legal kickbacks and referral fees. -the loan origination fee. -the amount of prepaids. -information that must be disclosed to the borrower at the loan application or within 3 business days of the application.>>>> the loan origination fee. Regulation Z requires: -disclosure of the settlement costs to buyers and sellers. -disclosure of the impound accounts and the prepaids of the borrower(s). -computation and disclosure of the APR to the borrowers. -disclosure of servicing information on the loan.>>>> computation and disclosure of the APR to the borrowers. If a borrower and a co-borrower are refinancing a home that they both occupy, at the closing - who must receive a copy of the rescission disclosure? -Both borrowers -Either borrower or co-borrower -Neither borrower because it is a refinance -Neither borrower because it is owner occupied and was already financed>>>> Both borrowers If a loan is a refinance, and the loan is improperly closed and funded in one day with no three day rescission period, how long do the borrowers have to rescind the transaction? -1 day -3 days -1 week -3 years>>>> 3 years What is not included in the APR calculations? -Mortgage insurance premium -Origination fee -Processing fee -Hazard/Fire insurance premium>>>> Hazard/Fire insurance premium Regulation B allows all of the following except: -inquiries about the ages of dependents. -inquiries about citizenship and residency status. -inquiring about receiving child support and/or alimony. -using the terms husband or wife when inquiring about a potential co-borrower.>>>> using the terms husband or wife when inquiring about a potential co-borrower. If an applicant has been denied credit, how long does the lender have to get a letter of adverse action to him/her? -10 days -15 days -30 days -It is not necessary to send a letter as long as the borrower knew before they applied they had bad credit.>>>> 30 days If the file is inactive for borrower non-performance a declination letter must be sent within? -10 days -15 days -30 days -It is not necessary to send a letter if the file is merely inactive.>>>> 30 days Define "Business day" under the Truth in Lending Act for the three day right of rescission. -Monday through Friday, except federally related holidays -Monday through Saturday, except federally related holidays -Monday through Saturday except legal public holidays -Any day the mortgage company is open for "business">>>> Monday through Saturday except legal public holidays Which property is exempt under RESPA? -Owner occupied dwellings -25 acres or more -Condominiums -PUDs and condominiums>>>> 25 acres or more A Good Faith Estimate: -must be within $500 of the final costs. -is an estimate only and is not required to reflect the actual settlement costs. -should exhibit a reasonable relationship to the actual final settlement costs. -be within $1,000 of the final costs.>>>> should exhibit a reasonable relationship to the actual final settlement costs. If a home is purchased with an FHA owner-occupied loan, the borrower must move in within? -10 days -20 days -30 days -60 days>>>> 60 days Which of the following must be provided to the client on an ARM loan? -The "Consumer Handbook on Adjustable Rate Mortgages" -The "ARM Handbook" -"When Your Home is on the Line" -"Your Settlement Costs and You" booklet by HUD>>>> The "Consumer Handbook on Adjustable Rate Mortgages" The CHARM booklet was prepared by: -the CFPB. -The Dept. of Housing and Urban Development. -The Federal Housing Administration. -The Federal Reserve Board.>>>> The Federal Reserve Board. When is a loan not subject to RESPA? -When it's a primary residence -When it's a second residence -When the property is 5 acres or less -When the property will be used for a commercial purpose>>>> When the property will be used for a commercial purpose The following two disclosures are required by RESPA, if applicable: -1003 and AfBA -GFE and AfBA -1003 and 1008 -Borrower's Signature Authorization and GFE>>>> GFE and AfBA Which of the following is responsible for determining the need for flood insurance? -The appraiser -The title company -The loan officer -The borrower>>>> The appraiser How long is flood insurance required? -Until the next drought -For the first 5 years -For the life of the loan -Until the LTV is 78% or less>>>> For the life of the loan What does HMDA stand for? -Home Mortgage Disclosure Act -Home Mortgage Disabilities Act -Housing Mortgage Disclosure Act -Home Mortgage Development Association>>>> Home Mortgage Disclosure Act Which of the following are functions of FACTA? (Select all that apply) -To improve consumer access to credit information -To improve resolution of consumer disputes with credit agencies -To prevent identity theft and restore credit history to victims of identity theft -All of the above>>>> All of the above What is the objective of FCRA? -To assure fairness, relevancy, confidentiality, and accuracy -To assure all borrowers have access to credit -To delete obsolete information -All of the above>>>> All of the above Under the FCRA, when must credit reporting agencies delete obsolete information? -5 years from the date placed for collection or charged off -10 years from the date opened, except for bankruptcies -7 years from the date of last activity, except for bankruptcies -7 years from the date of last activity including bankruptcies>>>> 7 years from the date of last activity, except for bankruptcies Which is the only authorized site for obtaining your free credit report? -FreeCreditR -AnnualCreditR -FreeS -CreditR>>>> AnnualCreditR When is it legal and/or acceptable for the loan originator to provide the consumer with a copy of his/her credit report? -Never -When the customer pays for it -When the customer requests it -When contracts with the credit reporting agency do not prohibit it>>>> When contracts with the credit reporting agency do not prohibit it What is ECOA? -Equal Credit Option Administration -Environmental Commission Oversight Act -Equal Consumer Opportunity Act -Equal Credit Opportunity Act>>>> Equal Credit Opportunity Act Regulation B does which of the following? -Protects a borrower from fraudulent use of their information -Requires Upfront Mortgage Insurance on all FHA loans -Provides equality in the extension of credit -Regulates advertising of APR>>>> Provides equality in the extension of credit Who provides the Annual Escrow Account Disclosure Statement? -The Mortgage Loan Originator -The Broker -The Title Company -The Servicing Lender>>>> The Servicing Lender When is an Affiliated Business Agreement required? -Always when there is a co-borrower/affiliate -Only purchase loans -If an affiliated business is providing services -It is no longer required>>>> If an affiliated business is providing services 4.It is no longer required Which of the following is a purpose of RESPA? -To regulate interest rates -To monitor high cost loans -To eliminate kickback and referral fees -To track real estate settlement trends>>>> To eliminate kickback and referral fees What is a purpose of the Truth in Lending Act? -To enable consumers to compare the cost of credit from lender to lender -To keep loan officers honest -To prevent kickback and referral fees -To oversee commercial lending>>>> To enable consumers to compare the cost of credit from lender to lender Which of the following is acceptable discrimination under ECOA? -Race -Sex -Religion -Employment>>>> Employment If an advertisement contains TRIGGER TERMS, what must then be disclosed? -APR only -APR and payment amount -Interest rate, term, balance, and APR -Interest rate, closing costs, and APR>>>> Interest rate, term, balance, and APR Which of the following is not a prepaid finance charge? -Origination fee -Discount point -Upfront Mortgage Insurance Premium -Appraisal fee>>>> Appraisal fee What is the purpose of HMDA? -To detect discriminatory lending -To prevent high cost loans -To regulate Home Mortgage Appraisals -To oversee the FHA>>>> To detect discriminatory lending Regulation B is affiliated with which act? -TILA -ECOA -HMDA -HOEPA>>>> ECOA ECOA prevents discrimination based on: -Income -Marital Status -Location -Employment>>>> Marital Status The practice of denying home financing in certain neighborhoods is called: -Redlining -Bait and switch -Dart boarding -Skimming>>>> Redlining How long must a brokerage owner keep records? -3 years -4 years -5 years -7 years>>>> 3 years Which of the following is an example of a subprime loan? -2/28 -3/1 -5/1 -360/180>>>> 2/28 A 360/180 best describes what type of loan? -Subprime -FHA -Balloon -ARM>>>> Balloon How often must a borrower receive an annual privacy notice? -As long as they are customers -Every 6 months -Only at closing -With initial disclosures, then annually for the first 5 years>>>> As long as they are customers Who is required to comply with the Do Not Call list? -National Banks -Airlines -Political organizations -Loan officers>>>> Loan officers Examples of Red Flags include all of the following except: -Fraud alert on credit reports -Documentation which appears altered or forged -Address discrepancies -Credit scores>>>> Credit scores The Patriot Act requires loan originators to: -check all gift donors against the known terrorist list. -report suspicious individuals. -keep records with customer identifying information for years. -verify citizenship/legal residency before submitting a file to underwriting.>>>> check all gift donors against the known terrorist list. Which disclosure is due within 3 business days of application? -Fair Housing Disclosure -HUD-1 -ECOA Notice -Servicing Disclosure>>>> Servicing Disclosure 68.What is the penalty for Red Flag non-compliance? -$5,000 per incident -$2,500 per incident -$10,000 per incident -$3,500 per incident>>>> $3,500 per incident The fastest permissible closing time under MDIA is: -3 business days -5 business days -7 business days -10 business days>>>> 7 business days According to MDIA, when must you provide a copy of the appraisal to your borrower? -3 business days prior to settlement -At settlement -1 business day prior to settlement -Within 90 days after a borrower request for the appraisal>>>> 3 business days prior to settlement -The Real Estate Settlement Procedures Act falls under the control of which agency? -HUD/CFPB -Federal Reserve -SEC -State Regulators>>>> HUD/CFPB -Which of the following entities oversees MDIA? -CFPB -HUD -State Attorney's General -Dept. of Veteran Affairs>>>> CFPB -Which of the following documents itemizes all settlement costs including lender charges? -Agreement of sale -HUD-1/Settlement statement -Form 1003 -Forbearance agreement>>>> HUD-1/Settlement statement According to the Truth-in-Lending Act (TILA), the term "refinance" applies to: -a change in payment schedule. -a reduction of the APR. -the renewal of a single payment obligation with no change in the original terms. -the satisfaction of an existing obligation and its replacement by a new obligation.>>>> the satisfaction of an existing obligation and its replacement by a new obligation. Which of the following methods of disclosure does NOT meet the requirements of the Equal Credit Opportunity Act (ECOA)? -E-Mail -Mailed Letter -Telephone -Faxed letter>>>> Telephone RESPA is the acronym for: -Real Estate Sales Procurement Act -Real Estate Sales Process Act -Real Estate Settlement Procedures Act -Rights, Equalization, Stabilization and Processing Act>>>> Real Estate Settlement Procedures Act -HMDA is the acronym for: -House and Mortgage Deposit Act. -Home Mortgage Discovery Act. -Home Mortgage and Development Act. -Home Mortgage Disclosure Act.>>>> Home Mortgage Disclosure Act. FIRREA is the acronym for: -Financial Institutions Reform, Recovery and Enforcement Act. -Fair Institutional Rules, Regulations and Equalization Act. -Federal Institution Recover, Reform, and Executive Act. -Falsification of Restoration, Recover and Extrication Act.>>>> Financial Institutions Reform, Recovery and Enforcement Act. FHA is the acronym for: -Fair Habitation Act -Federal Housing Act -Fair Home Act -Fair Housing Act>>>> Fair Housing Act FCRA is the acronym for: -Federal Credit Reporting Act. -Federal Certificate of Reimbursement Act. -Fair Credit Reporting Act. -Federal Community Redevelopment Act.>>>> Fair Credit Reporting Act. CFPB is the acronym for: -Congressional Fair Public Business Act. -Consumer Financial Protection Bureau. - Consumers Federal Policy Bureau. -Congressional Federal Protection Board.>>>> Consumer Financial Protection Bureau. ECOA is the acronym for: -Equal Credit Opportunity Act. -Equal Community Opportunity Act. -Equity Conservation and Organization Act. -Equal Contribution and Options Act.>>>> Equal Credit Opportunity Act. CRA is the acronym for: -Congressional Reclamation Act. -Community Reinvestment Act. -Community Redevelopment Act. -Cost of Reinvestment Act.>>>> Community Reinvestment Act. APR is the acronym for: -Average Percentage Rate. -All-Inclusive Percentage Rate. -Annual Percentage Rate. -Amortized Percentage Rate.>>>> Annual Percentage Rate. Which of the following, under RESPA, could NOT provide settlement services for the loan and purchase of an owner occupied property? -Someone who holds a power of attorney -The lender originating the loan -A licensed escrow officer -A licensed attorney>>>> Someone who holds a power of attorney 2.The lender originating the loan What is the penalty for a loan officer violating RESPA by paying a referral fee to a real estate agent? -$10,000/three years prison -$10,000/one year prison -$1,000/one year suspension -$5,000/one year prison>>>> $10,000/one year prison According to RESPA, where must the YSP be disclosed? -Truth in Lending Disclosure -Notice of Right to Cancel -Good Faith Estimate -APR Calculation>>>> Good Faith Estimate RESPA regulations require that an annual escrow statement be provided to the borrower within what time frame? -10 days after the end of the calendar year -Annually -30 days BEFORE the end of the calendar year -Annually 15 days after the funding of the loan by the new servicer>>>> Annually Which of the following does RESPA require to be given to the borrower? -Settlement Cost Booklet -Right of Rescission -Lead Based Paint Disclosure -APR Disclosure>>>> Settlement Cost Booklet Under RESPA, which of the following would be considered legal? -Charging a slight fee over the actual cost of the credit report. -Charging $50 over the actual cost of the appraisal. -A payment to a real estate agent bringing a client for a loan. -Charging for fees that are direct costs of the loan.>>>> Charging for fees that are direct costs of the loan. Under RESPA, the aggregate impound limits at closing are: -zero dollars or 1 months taxes and insurance. -1% of the entire principal balance. -zero dollars / up to 2 months taxes and insurance. -$100 and three months taxes and insurance.>>>> zero dollars / up to 2 months taxes and insurance. How much notice is the lender required to give the borrower before transferring the "servicing" of the loan? -10 Days -45 Days -30 Days -15 Days>>>> 15 Days A "trigger term" is any number used in advertising, other than the APR. When a trigger term is used, the advertising must include all of the following EXCEPT the: -Origination fee -Payment -Rate -Term>>>> Origination fee In all forms of advertising credit, the only number that can be freely used is the: -total number of payments. -amount financed. -annual percentage rate. -finance charge.>>>> annual percentage rate. When an ARM loan is obtained, additional disclosures to the borrower include all the following EXCEPT: -a loan program disclosure. -the balance in the lender's trust account. -a $10,000 loan historical example. -a handbook explaining Adjustable Rate Mortgages.>>>> the balance in the lender's trust account. The APR is the interest rate plus the finance charges computed and expressed as: -a percent. -an annual payment. -a dollar amount. -the amount financed.>>>> a percent. The APR includes fees that are required to get the loan. Not included are costs which would occur with a: -first time homebuyer. -home refinance loan. -cash buyer. -construction loan.>>>> cash buyer. The APR does not include which of the following? -Mortgage Insurance -Appraisal -Interest rate -Origination charges>>>> Appraisal The Truth in Lending Disclosure Statement must reveal all the following EXCEPT the: -date of the first payment. -annual percentage rate -finance charge. -amount financed.>>>> date of the first payment. According to Reg. Z, the borrower's automatic right to rescind the loan within 3 business days does not apply to: -loans used to refinance the borrower's home. -loans secured by second trust deeds. -equity lines of credit. -loans to purchase or build the borrower's residence.>>>> loans to purchase or build the borrower's residence. The borrower right to rescind the loan is disclosed in the: -72-hour Contingency Clause -Loan application -Notice of Right to Cancel -HUD-1 Settlement Statement>>>> Notice of Right to Cancel If the annual percentage rate (APR) of a loan changes more than .250 of 1% from the original disclosure on an irregular (ARM) transaction, which of the following would be applicable? -The lender is in violation of the law. -The borrower can "lock-in" the loan to avoid further interest increases. -The lender must pay for the borrower's credit report. -The borrower must be given a new disclosure at least 3 business days before the loan can be closed.>>>> The borrower must be given a new disclosure at least 3 business days before the loan can be closed. The Borrower is entitled to the disclosure of the costs of a mortgage loan in writing in a form he may keep: -within three business days of the loan application. -prior to making application for a loan. -within 7 business days of the loan application. -Within 3 business days prior to loan closing.>>>> within three business days of the loan application. The Truth in Lending Act protects the borrower by: -putting caps or limits on rate adjustments. -making low interest rate guarantees. -requiring disclosure of loan costs -establishing usury laws.>>>> requiring disclosure of loan costs Regulation Z is another name for: -Equal Credit Opportunity Act. -Truth in Lending Act. -Americans With Disabilities Act. -Home Mortgage Disclosure Act.>>>> Truth in Lending Act. The Truth in Lending Act is also known as: -Consumer Credit Protection Act -Fair Credit Reporting Act -Home Mortgage Disclosure Act -Trust Fund Accounting Act>>>> Consumer Credit Protection Act A refinance loan closes and funds. The lender forgot to tell the borrowers about the right of rescission. How long do the borrowers have to rescind the loan? -3 days -3 months -3 years -Only until the first payment is due>>>> 3 years A mortgage lender gave a final disclosure to a borrower which understated the APR by 50 basis points. What should be done? -The lender has to give the loan at the lower amount. -The lender should prepare new documents and redisclose in accordance with MDIA required waiting periods. -Re-close the transaction. -Nothing, as it was less than the required amount for redisclosure.>>>> The lender should prepare new documents and redisclose in accordance with MDIA required waiting periods. Under the Truth in Lending Act, which of the following is NOT a requirement? -Borrower review of HUD-1 -Three day right of rescission -Use of APR in advertising -Disclosure of loan costs>>>> Borrower review of HUD-1 Which of the following would NOT appear on the Truth-in-Lending Disclosure? -Finance charge -Amount financed -Total of Payments -Discount points>>>> Discount points Which of the following is NOT calculated into the APR? -Fixed interest rate -Lender's origination fee -Realtor's commission -Discount points>>>> Realtor's commission The APR includes all fees that are required in order to get the loan. Not included is: -title Insurance. -daily Interest charge. -MIP or PMI. -origination fee.>>>> title Insurance. All of the following Acts are part of Reg Z except: -Consumer Credit Protection Act. -Truth In Lending Act. -Mortgage Disclosure Improvement Act. -Real Estate Settlement Procedures Act.>>>> Real Estate Settlement Procedures Act. In an effort to become an informed borrower, each borrower should receive from the lender all of the following EXCEPT: -Real Estate Purchase Contract. -Good Faith Estimate. -Truth In Lending Disclosure Statement. -RESPA Settlement Costs booklet.>>>> Real Estate Purchase Contract. The Fair Credit Reporting Act covers all of the following EXCEPT: -disclosing obligations on users of consumer reports. -prohibiting discrimination regarding the handicapped. -regulating the consumer reporting industry. -ensuring fair, timely and accurate reporting of credit information.>>>> prohibiting discrimination regarding the handicapped. ECOA is also known as Reg.: -X -Z -B -C>>>> B TILA would not apply to which of the following: -Non Owner Occupied loans -Purchases -Refinance transactions -2-4 Unit Owner Occupied Rental units>>>> Non Owner Occupied loans The federal act that requires lenders to disclose mortgage loan information, by geographic area is: -HMDA. -FCRA. -ECOA. -RESPA.>>>> HMDA. Under the 1968 Fair Housing Act, which of the following is NOT one of the protected classes: -Race -Color -Age -Sex>>>> Age "Concessions," as relates to the mortgage business are: -illegal forms of advertising by real estate agents and companies. -offers by sellers to pay the buyers' down payment. -offers by sellers to contribute to the closing costs of the buyer. -special add-ons built into the property to make it more sell able to induce buyers into purchasing.>>>> offers by sellers to contribute to the closing costs of the buyer. Which of the following was added as a protected class under the Fair Housing Act? -A paraplegic -A person 62 years of age or older -An African-American -An American Indian>>>> A paraplegic In a face-to-face loan application with the lender, if the applicant does not wish to answer the questions in the government monitoring section, the loan officer must: -research and obtain the information. -end the process. -check the box "I do not wish to furnish this information". -fill out the information based on visual observation.>>>> fill out the information based on visual observation. Who of the following would be an appropriate person to discuss the borrower's credit? -Seller -Selling agent -Underwriter -Listing Agent>>>> Underwriter The responsibility of financial institutions to meet both the deposit and credit needs of the community, including the needs of low-income families, is called? -the Home Mortgage Disclosure Act. -the Community Reinvestment Act. -the Fair Credit Reporting Act. -the Equal Credit Opportunity Act.>>>> the Community Reinvestment Act. According to Regulation B, which of the following is not recommended? -Including income from alimony or child support if it is to be computed into the income -Asking about the number of children in the family -Always referring to the man as borrower and the woman as co-borrower -Asking if the applicant is married>>>> Always referring to the man as borrower and the woman as co-borrower The Homeowners Protection Act of 1998 does which of the following? -Gives buyers the right to cancel a contract based on property condition -Requires a buyer to sign a disclosure regarding home inspections -Gives borrowers the right to cancel PMI when certain conditions are met -Provides consumers a means of protection through PMI>>>> Gives borrowers the right to cancel PMI when certain conditions are met The Privacy Act allows a lender to do which of the following? -Share a borrower's information with those necessary to complete the loan request -Share a borrower's information with anyone if no fee is received -Sell a borrower's information to anyone as long as it is private -Sell a borrower's information with the parent company, affiliates and non-affiliates>>>> Share a borrower's information with those necessary to complete the loan request A borrower applies for a loan. After pulling the borrower's credit, the loan is denied. Which of the following must occur? -A loan denial letter must be sent to the borrower within 30 days of the date of the application. -The borrower may not get a loan at another Mortgage Company. -A loan denial letter must be sent to the real estate agent. -The borrower must wait one (1) year before applying for an FHA loan.>>>> A loan denial letter must be sent to the borrower within 30 days of the date of the application. If a borrower is denied financing based on credit, which of the following must be done? -Send a written adverse action notice 30 days after the date of the credit report. -Notify borrower by telephone within the next couple of days. -Send a written adverse action notice within 30 days of the date of the application. -Notify borrower in person within the next 15 days.>>>> Send a written adverse action notice within 30 days of the date of the application. A borrower wants to purchase a 2nd home and tells you that they intend to rent the property out when they are not living in it. You have reviewed their financial information and realize that the borrower would qualify for financing if the property is classified as a 2nd residence. However, if the property is classified as an investment property, the borrower is unlikely to qualify. What should you do? -Classify the property as a rental property even though the borrower intends to reside there part of the year. -Classify the property as a 2nd residence; since the borrower intends to use the property for part of the year, this is acceptable. -Classify the property as a 2nd residence because it is not legal for the borrower to personally reside in a property classified as a rental for any length of time. -Deny the borrower because it is neither legal to rent out a 2nd residence or reside in a rental property for any length of time.>>>> Classify the property as a rental property even though the borrower intends to reside there part of the year. A potential client is shopping around for a competitive rate and a 15-day lead time to close. The brokerage you work for offers highly competitive rates, has an average lead to close time of 30 days, and a fast lead to close time of 21 days. Understanding these figures, you tell the client you can meet their demands and secure their business. This action is: -legal but unethical. -illegal but ethical. -illegal and unethical. -legal and ethical.>>>> legal but unethical. Considering the legislation of the Secure and Fair Enforcement Act (S.A.F.E. Act) of 2008, originating a loan for a family member or other blood relation is considered: -illegal but ethical. -legal but unethical. -illegal and unethical. -legal and ethical.>>>> ... You are working on a file referred to you by a realtor. The realtor calls you to see if there is going to be any problem getting the customer qualified. The realtor wants to know what the borrower's credit scores are before presenting the offer. The most appropriate course of action is to: -refer the realtor to the borrower. -never disclose a borrower's information to a realtor. -obtain permission from the borrower to disclose the information. -tell the realtor the credit score.>>>> refer the realtor to the borrower. You are working with a customer who has disclosed they have new payment obligations that do not appear on their credit report. You realize that your customer qualifies for a loan based on figures calculated using only payment obligations reported on their credit. In order to ensure your client qualifies, you decide to exclude the payment obligations that do not appear on the credit report. This action is: -Illegal but ethical -legal but unethical. -legal and ethical. -illegal and unethical. -illegal but ethical.>>>> illegal and unethical. You have a customer who has been approved by the lender and is ready to close. The customer backs out at the last minute because of a recent interest rate drop and opts to go with a different loan officer. You paid for the appraisal and want to invoice the customer and be reimbursed. This course of action would be considered: -Legal and ethical -Illegal and unethical -Legal but unethical -Illegal but ethical>>>> Legal and ethical You have been working with a client for the past six months who has finally been approved by the lender and is ready to close. Two days before closing, interest rates drop and you explain to your customer that you are unable to go with a different lender at the better rate because of the standing commitment to the current lender. You also inform your client that breaking a rate with a lender is very damaging to the brokerlender relationship. After explaining the situation, your client still chooses to back out of the loan and go with a different loan officer. Your client's action in this situation is: -illegal but ethical. -illegal and unethical. -legal but unethical. -legal and ethical.>>>> legal but unethical. You have completed the necessary Pre-licensure education, testing, and application requirements to obtain your mortgage license. You have been hired by a brokerage and expect your background check to clear shortly. You have a friend who is eager to proceed with a loan application and your manager at the brokerage has said that you can start the file under his/her name, then switch it back to your name once your license arrives. This action is: -legal and ethical. -illegal but ethical. -illegal and unethical. -legal but unethical.>>>> illegal and unethical. On a Federal Residential Loan Application: You initially disclose a rate of 5% to the customer but are floating the rate. Over the next few days, rates improve and you have the option to lock the customer in at a rate of 4.75% and earn the same compensation. This behavior would be considered: -illegal and unethical. -legal and ethical. -illegal but ethical. -legal but unethical.>>>> legal and ethical. You interview a customer and collect all the information needed to fill out the 1003 and run credit. Before running credit, you specifically ask the client if it is okay to run their credit, and they consent. You should now: -have the customer sign a Borrower's Authorization form and then pull credit. -hang up the phone and run their credit. -ask the borrower to repeat their verbal consent, record it, and then pull credit. -feel confident a Borrower's Signature Authorization is not required as the consent has already been given.>>>> have the customer sign a Borrower's Authorization form and then pull credit. You just closed a loan with a customer and would like to take them out to dinner to celebrate their new home purchase. Midway through the meal, you realize paying for your clients' meals may be considered a violation of RESPA. You should: -ask your clients to pay for your meal. -proceed; it is ok to for you to pay for their meals. -ask your clients to pay for their meals. -pay only if their meal is under $25 which is allowed.>>>> proceed; it is ok to for you to pay for their meals. You pull credit on a husband and wife. It turns out their debt-to-income ratio is too high. You notice the majority of the debts belong to the husband. You also note that the wife has enough income to qualify on her own. You remove the husband from the loan, submit the file, and receive approval. This action is: -legal but unethical (except for communal property sales). -illegal but ethical (except for communal property sales). -illegal and unethical (except for communal property sales). -legal and ethical (except for communal property sales).>>>> legal and ethical (except for communal property sales). Your borrower has a joint-asset account with another person. Most of the money in the account belongs to the non-borrower. The lender requires two months of bank statements. Under this circumstance, the documentation needed by the lender requires you to: -obtain a VOD with only the borrower's name on it. -remove the non-borrower's information since it is not applicable. -disclose and document deposits for the borrower and non-borrower. -temporarily transfer all the money into a separate account with only the borrower's name on it.>>>> disclose and document deposits for the borrower and non-borrower. Your customer calls you in the morning and tells you to lock the interest rate at the 5.5% you initially disclosed. You commit to lock the rate, but your day becomes busy and you aren't able to lock it until later in the day. When you go to lock the rate, you notice that the pricing has changed since this morning and the rate of 5.5% is now going to cost an additional $500.00. What is the most appropriate course of action? -Call the customer before locking the rate and tell them about the $500 cost -Pay the $500 cost and lock the rate -Float the rate until rates improve -Lock the rate and charge a $500 administration fee at closing>>>> Pay the $500 cost and lock the rate A history showing the title changes regarding a property is required by an underwriter for what purpose? -To verify the absence of property flipping -To determine if there have been any forgeries -To establish that the boundaries are correct -To give a chronological record of all liens>>>> To verify the absence of property flipping A transaction where the buyers have signed a contract to purchase real property, but have the intention of immediately selling it to another buyer is called: -FICO -A kickback -Flipping -A service release premium>>>> Flipping Early default is usually an indicator of: -FICO score. -a prepayment penalty. -yield spread premium. -loan fraud.>>>> loan fraud. If fraud is discovered by the servicer, what is LEAST likely to occur? -The borrower will experience a rate increase -A buyback by the originating lender -Calling the note due -The originating lender returns any premium fees>>>> The borrower will experience a rate increase Reporting of suspected loan fraud should be done at this level of government: -County -State -City -National>>>> State When fraud on the part of the borrower is found in a loan file, which of the following is likely to occur? -The borrower will not be affected until default -The mortgage broker may be forced to buy back the loan -The loan officer will go to jail -Nothing - it's built into the rates>>>> The mortgage broker may be forced to buy back the loan When is a loan officer authorized to refuse to accept a loan application? -When the borrowers' property is in a declining market -When the lender doesn't think the property will appraise high enough -When the applicant refuses to disclose their race and marital status -When the information supplied by the applicant appears fraudulent>>>> When the information supplied by the applicant appears fraudulent If an applicant works 40 hours a week and is paid $ 14.26 per hour, what is the applicant's average monthly income? -$2,487.68 -$2,281.60 -$2,471.73 -$2,444.57>>>> $2,471.73 The requirement for private mortgage insurance is generally discontinued when the loan-to- value ratio falls below: -20% -50% -78% -90%>>>> 78% The term "20 basis points" expressed as a percentage is: -0.02% -0.20% -2.00% -20.00%>>>> 0.20% According to the Truth-in-Lending Act (TILA), which of the following fees is EXCLUDED from the calculation of the annual percentage rate? -Hazard insurance -Wire Transfer -Prepaid interest -Mortgage insurance premiums>>>> Hazard insurance VA is the acronym for: -Verification and Admissions. -Veterans Administration. -Veteran Affairs. -Variable Add-ons.>>>> Veteran Affairs. PUD is the acronym for: -Planned Unit Development. -Primary Utility Disclosure. -Preliminary Uniform Disclosure. -Planned Urban Development.>>>> Planned Unit Development. PITI is the acronym for: -Principal, Interest, Taxes, Insurance. -Primary Integrated Taxes and Investment. -Price, Investment, Taxes, Insurance. -Property Interest and Tax Installment.>>>> Principal, Interest, Taxes, Insurance. LTVR/LTV is the acronym for: -Lot to value ratio -Loan to value ratio -Less than value ratio -Land to value ratio>>>> Loan to value ratio LIBOR is the acronym for: -London Inter-bank Offered Rate. -Land Investment and Bank Offered Regulation. -London Institutions of Britain Organization Rule. -Loan and Interest Board Of Rates.>>>> London Inter-bank Offered Rate. HELOC is the acronym for: -Home Equity Line of Credit.. -Housing Equity Loan Corporation. -Housing Equity Loans Of Commission. -House and Environmental Landscaping of Compensation Act.>>>> Home Equity Line of Credit.. FDIC is the acronym for: -Federal Deposit Insurance Corporation. -Fair Distribution of Insurance Commissions. -Federal Development of Institutional Corporations. -First Deposit and Insurance Corporation.>>>> Federal Deposit Insurance Corporation. CRV is the acronym for: -Community Redevelopment Value. -Certificate of Residential Value. -Certificate of Reasonable Value. -County Residential Valuation.>>>> Certificate of Reasonable Value. COFI is the acronym for: -Calculation of Foreign Indexes. -Cost of Funds Index. -Coefficient of Funding Index -Confluence of Funds Index>>>> Cost of Funds Index. ALTA is the acronym for: -American Land Truth Act. -Afro-American Loan Truth Act. -All-Inclusive Loan and Title Association. -American Land Title Association.>>>> American Land Title Association. FHA (Federal Housing Administration) loans fall under the control and guidelines of: -HUD/CFPB. -FNMA/FHLMC. -RESPA/TILA. -PAR/BPS.>>>> HUD/CFPB. New VA loans are available to: -family members of veterans. -eligible veterans. -any qualified buyer. -friends of veterans.>>>> eligible veterans. Which of the following statements about a VA loan is true? -A veteran can have two or more VA loans in place simultaneously. -A veteran must pay off a previous VA loan before he/she can obtain a second VA loan. -Once a veteran uses his/her loan benefit, the benefit goes away. -Veterans can use their benefit to get a loan to purchase a personal residence a maximum of two times.>>>> A veteran can have two or more VA loans in place simultaneously. FHA loans can be obtained by: -middle income wage earners as defined by law. -low income wage earners only. -only first time home buyers. -anyone.>>>> anyone. Interest rates for an FHA loan are set by: -HUD. -Federal Reserve Bank. -market forces and/or negotiation between lender and borrower. -Federal Reserve Board.>>>> market forces and/or negotiation between lender and borrower. On an FHA loan, the discount points can be paid: -only through having them added to the loan. -only by the borrower. -only by the seller. -either by the borrower and/or the seller.>>>> either by the borrower and/or the seller. FHA loan limits change from time to time, and are based on the: -average selling price of homes in a county. -FNMA maximums minus 20%. -average income level of the county. -FHA median house prices.>>>> FHA median house prices. Which type of loan application requires a residual income analysis to be performed? -FHA loan -Jumbo -VA loan -Conventional>>>> VA loan An active duty service person, or a veteran obtaining his/her first VA loan would pay what amount for the VA funding fee (2012)? -2% -2.15% -2.40% -2.25%>>>> 2.15% The loan officer suspects the social security number in an FHA application is incorrect, what must he/she do? -Contact the Social Security administration to verify it. -Proceed with the loan, because FHA will verify the social security number. -Proceed with the loan and HUD will verify it. -Give the borrower five days to bring in the verification.>>>> Contact the Social Security administration to verify it. What are the qualifying ratios on an FHA loan when manually underwritten? -28/36 -31/43 -29/41 -33/38>>>> 31/43 What loan requires an upfront mortgage insurance fee? -Conventional -FHA -VA -Subprime>>>> FHA On an FHA loan, which form of a gift is NOT allowed? -The seller gifts the down payment -Gift from a grandmother -Gift from an aunt and uncle -An employer gift which does not have to be repaid>>>> The seller gifts the down payment In selling a home which has an FHA loan, when can the FHA loan be assumed? -FHA loans cannot be assumed -When the seller indemnifies the lender against default -When the buyer signs a release document -When the loan documents say the FHA loan is assumable>>>> When the loan documents say the FHA loan is assumable How much is charged for the up front mortgage insurance on an FHA loan (2012)? -1.25% -1.50% -1.75% -2.25%>>>> 1.75% When a borrower asks for an FHA loan, which of the following is false concerning the borrower's credit? -Collections will not affect the credit score -If the credit score is less than 640, the borrower may still get a loan -With excellent credit, the borrower will not get a better mortgage rate -If the borrower has credit issues, but can convince an underwriter of credit worthiness, s/he may still get a loan>>>> Collections will not affect the credit score Which of the following would keep you from getting an FHA loan? -Not having a down payment -No college education -Not having a spouse -Self-employment>>>> Not having a down payment The borrower wants to get an FHA loan, but a judgment appears on the credit report. Which of the following represents how the judgment will be treated? -As long as the judgment was over one year ago, it has no bearing. -With a letter of explanation, the borrower may be approved for an FHA loan. -The judgment must be paid in full before the borrower can get an FHA loan. -If the judgment was over two years ago, it will have no bearing.>>>> The judgment must be paid in full before the borrower can get an FHA loan. When purchasing a home with an FHA loan, which of the following is true concerning employment? -Self-employment is not allowed -Salaried employment is always verified -The employer must have been in business for 2 years -Employment is not verified for an FHA loan>>>> Salaried employment is always verified With an FHA loan, which of the following is true concerning qualifying ratios? -Automated underwriting may approve a borrower with ratios higher than 29/41 -A borrower with a very high credit score may get a loan with 55% debt ratio -A borrower with a very low credit score can only borrow to a 31% debt ratio -The maximum ratios in any circumstance are 31/43>>>> Automated underwriting may approve a borrower with ratios higher than 29/41 Which of the following is true concerning income with an FHA loan? -Borrowers may state income on any FHA loan -Income is not verified on FHA loans -Income must always be verified -Borrowers may only state income on an FHA ARM loan>>>> Income must always be verified A calculation of the return on investment that considers the price paid, the time held and the interest charged, which on a discounted loan could be greater than the interest charged is called the: -effective rate. -nominal rate. -effective yield. -premium rate.>>>> effective yield. Which of the following does NOT directly influence interest rates? -Early payoffs -Foreclosure -Fraud -Federal Reserve Bank>>>> Early payoffs A person, who brings a borrower and lender together, is knows as a: -loan officer. -mortgage lender. -mortgage broker. -loan intermediary.>>>> mortgage broker. For loans purchased by FNMA or FHLMC, the conforming limit for 2012 is: -$322,700.00 -$333,700.00 -$417,000.00 -$300,700.00>>>> $417,000.00 What is a mortgage or trust deed? -The document that passes title from the borrower to the lender on the property being collateralized -The instrument that makes the lender a partial owner of the collateralized property -The document that creates a lien against the property -It is the contract that establishes the conditions for the loan and the repayment of money>>>> The document that creates a lien against the property Under a trust deed and note, what interests do the borrower and lender hold in the property which is used as collateral? -Borrower - legal title, Lender - equitable title -Borrower - legal title, Lender - a lien -Borrower - equitable title, Lender - legal title -Borrower - lien, Lender - legal title>>>> Borrower - legal title, Lender - a lien Borrowers who qualify for conforming loans would be referred to as: -D paper borrowers. -B paper borrowers. -C paper borrowers. -A paper borrowers.>>>> A paper borrowers. In the mortgage business, what does the word "term" refer to? -The various "terms" of the promissory note -The amount of time your mortgage license has left before expiration -The length of time of the loan -The time it takes from application to settlement>>>> The length of time of the loan The entity that services a loan, basically takes on the duties of the: -mortgagee. -mortgagor. -trustor. -obligor.>>>> mortgagee. The way to compute loan to value would be? -Divide the loan amount by the value of the property. -Multiply the property value by the loan amount. -Divide the property value by the loan amount. -Multiply the loan amount by the property value.>>>> Divide the loan amount by the value of the property. SRP stands for: -Standard Rate Product. -Servicing Release Pricing. -Service Release Premium. -Standard Rate Premium.>>>> Service Release Premium. When a loan is immediately being sold onto the secondary market, the responsibility of "funding" belongs to the: -borrower. -secondary lender. -primary lender. -seller.>>>> primary lender. Another way to refer to non-conforming loans would be: -investment. -FHA. -Jumbo. -VA.>>>> Jumbo. When FNMA or FHLMC loan limits are exceeded, the loan is considered to be ___________. -Subprime -Jumbo -Suspended -Conforming>>>> Jumbo An interest rate at PAR would be? -The interest rate before any fees -An interest rate with no YSP or SRP -The rate charged by banks to their best customers -The rate quoted in radio advertising to induce clients to call, but which will require discount points>>>> An interest rate with no YSP or SRP Which of the following is true about the index used in an ARM? -LIBOR is always the best index to use. -You can only change the index once during the life of the loan. -The index may only be a US Treasury Bill. -The index rate can change on the loan after settlement>>>> The index rate can change on the loan after settlement Negative amortization is when the: -borrower is not making payments on the loan. -mortgagee makes payments to the mortgagor. -payment is interest only, and the principal of the loan is not being reduced. -payment is less than the required interest amount and the loan balance increases.>>>> payment is less than the required interest amount and the loan balance increases. An adjustable rate mortgage has two components to it, the index and the margin. After closing which of these can change? -Index only -Margin only -Both index and margin -Neither because the loan is "closed">>>> Index only Which of the following would NOT be an acceptable trust deed rider? -A condo rider -An ARM rider -A PUD rider -Mortgage insurance rider>>>> Mortgage insurance rider A borrower who qualifies for B, C or D paper or less favorable terms and interest rates is referred to as a: -subprime borrower. -conforming borrower. -non-conforming borrower. -secondary borrower.>>>> subprime borrower. Two people obtain a loan and buy a home, taking ownership as joint tenants. Which of the following would NOT be true? -Both must sign on the loan -Each owns 50% -Neither could sell without the other's permission -Each owns 100%>>>> Each owns 50% The cost approach of an appraisal is used for all of the following EXCEPT: -To determine the cost of income, on a rental property -insurance. -new construction. -remodel. -to determine the cost of income, on a rental property.>>>> To determine the cost of income, on a rental property When using the comparison approach, the appraiser is attempting to: -adjust the subject property to the comparable. -make neighborhood adjustments to determine the value of the property. -adjust the comparable to the subject property. -find a property that is identical to the subject property.>>>> adjust the comparable to the subject property. When there is a clause in a mortgage that requires the borrower to pay an extra fee if the loan is paid off early, it is known as a: -post-payment penalty. -prepayment penalty. -early payoff charge. -prepayment privilege.>>>> prepayment penalty. Which of the following is NOT true concerning SRP? -The Lender that services the loan does not receive the SRP. -Brokers do not get the SRP. -Brokers may receive an SRP. -Lenders get the SRP when the loan is sold.>>>> Brokers may receive an SRP. As it relates to a loan, the right of redemption is the right of: -the borrower to renegotiate the terms of the loan. -the lender to foreclose on a property. -the lender to sell the property during the redemptive period. -the borrower to redeem their property during the redemption period.>>>> the borrower to redeem their property during the redemption period. Which of the following documents would contain the details about the loan amount, payment, when payments are due, late penalty, interest rate, etc.? -Mortgage -Promissory note -Loan package -Trust Deed>>>> Promissory note If a sheriff's sale is held, the document that dictated the foreclosure sale was a: -mortgage. -due-on-sale clause. -trust deed and note. -deed in lieu of foreclosure.>>>> mortgage. Which of the following would NOT be a red flag of the possibility of loan fraud? -Sales price is substantially below market value. -Name and address on the deposit check is different from the buyer. -A REALTOR® is involved in the transaction. -Deposit check was not cashed.>>>> A REALTOR® is involved in the transaction. A balloon loan is best described as: -a loan that is paid in one lump sum. -a loan that has a floating rate. -a loan that exceeds the loan limit. -a loan that is paid annually.>>>> a loan that is paid in one lump sum. A loan paid in a lump sum after a fixed amount of time is called? -A conventional loan -An ARM -A balloon loan -A jumbo loan>>>> A balloon loan How does the secondary market help lenders? -They sell loans. -They insure loans. -They guarantee loans. -They purchase loans.>>>> They purchase loans. How much is 1 discount point? -A 1% reduction in the note rate -$1,000 -1% of the loan amount -1% of the sales price>>>> 1% of the loan amount What is the amount of money that VA guarantees called? -Escrow -Endorsement -Encroachment -Entitlement>>>> Entitlement The best description of LTV is a percentage of what? -The amount borrowed compared to the sales price or the appraised value -The down payment compared to the sales price or appraised value -The total of the borrower's monthly debts compared to his/her total monthly income -The loan amount compared to the borrower's total assets>>>> The amount borrowed compared to the sales price or the appraised value The main difference between FHA and VA is that VA: -has lower discount points than FHA loans. -has no prepayment penalty. -guarantees the loan whereas FHA insures the loan. -allows assumptions.>>>> guarantees the loan wher