HUD EXAM PREP - AVOIDING
FORECLOSURE 5 QUESTIONS &
ANSWERS12
Servicer - ANSWERS-- A company that handles all the administrative aspects of a loan from the
closing to mortgage payoff
- includes: handling the payments, escrow, and all documentation for records
Foreclosure - ANSWERS-mortgaged property is sold to pay the loan of a defaulting borrower.
Foreclosure laws are based on the statutes of each state.
what types of housing counseling can counselors not charge a service fee for? - ANSWERS--
homelessness
- foreclosure prevention
Negative Amortization - ANSWERS-Occurs when the loan payment is not sufficient to cover the
interest cost and results in the unpaid interest being added to the original balance, causing the
loan amount to grow overtime.
HELOC - ANSWERS-- a line of credit that you can take from at any time during the draw period,
up to your credit limit.
- the draw period is 10 years and the repayment period lasts 15 years.
- variable rates and interest only payments
Subprime Lending - ANSWERS-- Loans to borrowers with poor credit.
- Typically charge higher interest rates to insure against losses.
, Teaser Rates - ANSWERS-An initial temporary interest rate on an adjustable-rate mortgage that
results in lower mortgage payments.
what factors led to the increase in foreclosure rates (crisis in 2007)? - ANSWERS-- subprime
loans
- negative amortization
- aggressive marketing of HELOCs
- using teaser rates to qualify more borrowers
CFPB - ANSWERS-- Consumer Finance Protection Bureau
- established by Dodd-Frank in
- carry out federal consumer financial laws
- monitors financial markets for new risks to consumers
- takes consumer complaints
- promotes financial education
- restricts abusive practices
Dual Tracking - ANSWERS-occurs when the servicer moves forward with foreclosure while
simultaneously working with the borrower to avoid foreclosure
what is the most common reason that a homeowner faces foreclosure? - ANSWERS-- reduce or
lost income
what other reasons often lead to foreclosure? - ANSWERS-- medical bills
- poor budget management
- increase in expenses
- divorce
FORECLOSURE 5 QUESTIONS &
ANSWERS12
Servicer - ANSWERS-- A company that handles all the administrative aspects of a loan from the
closing to mortgage payoff
- includes: handling the payments, escrow, and all documentation for records
Foreclosure - ANSWERS-mortgaged property is sold to pay the loan of a defaulting borrower.
Foreclosure laws are based on the statutes of each state.
what types of housing counseling can counselors not charge a service fee for? - ANSWERS--
homelessness
- foreclosure prevention
Negative Amortization - ANSWERS-Occurs when the loan payment is not sufficient to cover the
interest cost and results in the unpaid interest being added to the original balance, causing the
loan amount to grow overtime.
HELOC - ANSWERS-- a line of credit that you can take from at any time during the draw period,
up to your credit limit.
- the draw period is 10 years and the repayment period lasts 15 years.
- variable rates and interest only payments
Subprime Lending - ANSWERS-- Loans to borrowers with poor credit.
- Typically charge higher interest rates to insure against losses.
, Teaser Rates - ANSWERS-An initial temporary interest rate on an adjustable-rate mortgage that
results in lower mortgage payments.
what factors led to the increase in foreclosure rates (crisis in 2007)? - ANSWERS-- subprime
loans
- negative amortization
- aggressive marketing of HELOCs
- using teaser rates to qualify more borrowers
CFPB - ANSWERS-- Consumer Finance Protection Bureau
- established by Dodd-Frank in
- carry out federal consumer financial laws
- monitors financial markets for new risks to consumers
- takes consumer complaints
- promotes financial education
- restricts abusive practices
Dual Tracking - ANSWERS-occurs when the servicer moves forward with foreclosure while
simultaneously working with the borrower to avoid foreclosure
what is the most common reason that a homeowner faces foreclosure? - ANSWERS-- reduce or
lost income
what other reasons often lead to foreclosure? - ANSWERS-- medical bills
- poor budget management
- increase in expenses
- divorce
