HUD CERTIFICATION ACTUAL TESTED QUESTIONS AND
ANSWERS GRADED A+
✔✔Fair Credit Reporting Act (FCRA) - ✔✔You have the right to know what is in your
credit file.
✔✔Fair Credit Billing Act (FCBA) - ✔✔Which federal law protects a consumer's right to
dispute a billing error associated with his/her credit card account.
✔✔Fair Credit Reporting Act (FCRA) - ✔✔What act limits employers access to persons
credit report.
✔✔Wire Transfer Fee - ✔✔Fee charged when a client sends a payment to another
account electronically through electronic funds transfer (EFT)
✔✔Overdraft Fee - ✔✔Fee charged when an account doesn't have money to cover a
purchase and the financial institution loans money to complete the payment.
✔✔Stop Payment Fee - ✔✔Fee charged to invalidate a check before it is cashed.
✔✔NSF Fee - ✔✔Fee charged if there is not enough money in an account to cover a
check payment of other purchase.
✔✔CD; Money Market; High-Interest Account - ✔✔Examples of accounts that would be
ideal for short-term large purchase savings
✔✔Renters Insurance - ✔✔An insurance policy that provides coverage for damages,
within a rental property, to renters' belongings and liability.
✔✔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
✔✔Default - ✔✔The inability to make timely payments or fulfill legal obligations of loan
terms.
✔✔Equity - ✔✔Value of ownership interest in property.
✔✔Foreclosure - ✔✔A legal process in which mortgaged property is sold to pay the
loan of a defaulting borrower.
✔✔Escrow - ✔✔Funds to be used for specific purposes by parties carrying out a mutual
transaction, deposited with a third party.
, ✔✔Closing Costs - ✔✔Fees for final property transfer that are not included in the price
of the property.
✔✔Homeowners Insurance - ✔✔An insurance policy that can provide coverage for
damages to a dwelling and contents that belong to the homeowner.
✔✔Front-end Ration - ✔✔A rate that calculates a borrower's housing-related obligations
as a percentage of gross monthly income. AKA - Housing Ratio
✔✔Conventional Loan - ✔✔A mortgage loan backed by private lenders. Loans with a
DP less than 20% of purchase price may require private mortgage insurance (PMI)
✔✔Principal - ✔✔The amount of money borrowed to buy a house or the amount of the
loan that has not been paid back to the lender.
✔✔Mortgage Insurance Premium (MIP) - ✔✔A monthly payment, usually part of the
mortgage payment for FHA loans, paid by a borrower for mortgage insurance.
✔✔Private mortgage Insurance (PMI) - ✔✔Insurance policy that protects a lender from
potential risks when a homebuyer pays less than 20% for a down payment.
✔✔Ground Rent - ✔✔An arrangement in which the owner of a dwelling or structure
does not own the land on which the structure resides.
✔✔Association Dues - ✔✔Charged by community or Homeowners Association to pay
for repairs, upkeep, landscaping, improvements and property management.
✔✔Adjusted Gross Income - ✔✔Gross income minus adjustments, or reductions, that
one is eligible for, such as deductions for unreimbursed business expenses, tuition and
fees, and contributions to certain retirement accounts.
✔✔Profit and Loss Statments - ✔✔A summary of revenue, costs, and expenses
incurred during a defined period, such as a fiscal year.
✔✔Back-End Ratio - ✔✔A rate that calculates a borrower's total monthly debt, including
housing and other debt obligations, as a percentage of gross monthly income.
✔✔Character - ✔✔Credit history, employment history, and housing stability to
determine the likeliness that the borrower will repay their debts
✔✔Capacity - ✔✔Lender considers consistency of employment and income, adequacy
of income to repay debt, recurring debts and frequency and type of wages
ANSWERS GRADED A+
✔✔Fair Credit Reporting Act (FCRA) - ✔✔You have the right to know what is in your
credit file.
✔✔Fair Credit Billing Act (FCBA) - ✔✔Which federal law protects a consumer's right to
dispute a billing error associated with his/her credit card account.
✔✔Fair Credit Reporting Act (FCRA) - ✔✔What act limits employers access to persons
credit report.
✔✔Wire Transfer Fee - ✔✔Fee charged when a client sends a payment to another
account electronically through electronic funds transfer (EFT)
✔✔Overdraft Fee - ✔✔Fee charged when an account doesn't have money to cover a
purchase and the financial institution loans money to complete the payment.
✔✔Stop Payment Fee - ✔✔Fee charged to invalidate a check before it is cashed.
✔✔NSF Fee - ✔✔Fee charged if there is not enough money in an account to cover a
check payment of other purchase.
✔✔CD; Money Market; High-Interest Account - ✔✔Examples of accounts that would be
ideal for short-term large purchase savings
✔✔Renters Insurance - ✔✔An insurance policy that provides coverage for damages,
within a rental property, to renters' belongings and liability.
✔✔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
✔✔Default - ✔✔The inability to make timely payments or fulfill legal obligations of loan
terms.
✔✔Equity - ✔✔Value of ownership interest in property.
✔✔Foreclosure - ✔✔A legal process in which mortgaged property is sold to pay the
loan of a defaulting borrower.
✔✔Escrow - ✔✔Funds to be used for specific purposes by parties carrying out a mutual
transaction, deposited with a third party.
, ✔✔Closing Costs - ✔✔Fees for final property transfer that are not included in the price
of the property.
✔✔Homeowners Insurance - ✔✔An insurance policy that can provide coverage for
damages to a dwelling and contents that belong to the homeowner.
✔✔Front-end Ration - ✔✔A rate that calculates a borrower's housing-related obligations
as a percentage of gross monthly income. AKA - Housing Ratio
✔✔Conventional Loan - ✔✔A mortgage loan backed by private lenders. Loans with a
DP less than 20% of purchase price may require private mortgage insurance (PMI)
✔✔Principal - ✔✔The amount of money borrowed to buy a house or the amount of the
loan that has not been paid back to the lender.
✔✔Mortgage Insurance Premium (MIP) - ✔✔A monthly payment, usually part of the
mortgage payment for FHA loans, paid by a borrower for mortgage insurance.
✔✔Private mortgage Insurance (PMI) - ✔✔Insurance policy that protects a lender from
potential risks when a homebuyer pays less than 20% for a down payment.
✔✔Ground Rent - ✔✔An arrangement in which the owner of a dwelling or structure
does not own the land on which the structure resides.
✔✔Association Dues - ✔✔Charged by community or Homeowners Association to pay
for repairs, upkeep, landscaping, improvements and property management.
✔✔Adjusted Gross Income - ✔✔Gross income minus adjustments, or reductions, that
one is eligible for, such as deductions for unreimbursed business expenses, tuition and
fees, and contributions to certain retirement accounts.
✔✔Profit and Loss Statments - ✔✔A summary of revenue, costs, and expenses
incurred during a defined period, such as a fiscal year.
✔✔Back-End Ratio - ✔✔A rate that calculates a borrower's total monthly debt, including
housing and other debt obligations, as a percentage of gross monthly income.
✔✔Character - ✔✔Credit history, employment history, and housing stability to
determine the likeliness that the borrower will repay their debts
✔✔Capacity - ✔✔Lender considers consistency of employment and income, adequacy
of income to repay debt, recurring debts and frequency and type of wages
