HUD Housing Counselor Exam Questions With Correct Answers

Adjustable Rate Mortgage (ARM) - Answer Adjustable rate mortgages have an initial rate that applies for a defined period of time (typically from one month to 10 years), then adjusts at pre-determined intervals for the life of the loan. Interest rates can increase or decrease when adjusted. Adjusted Gross Income - Answer 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. AFFH - Answer Affirmatively Furthering Fair Housing AFHMP - Answer Affirmative Fair Housing Marketing Plan Analysis of Impediments (AI) - Answer Analysis of Impediments is a review of impediments or barriers that affect the rights of fair housing choice. It covers public and private policies, practices, and procedures affecting housing choice. Impediments to fair housing choice are defined as any actions, omissions, or decisions that restrict, or have the effect of restricting, the availability of housing choices, based on race, color, religion, sex, disability, familial status, or national origin. The AI supports fair housing planning; provides essential information to policy makers, administrative staff, housing providers, lenders, and fair housing advocates; and assists in building public support for fair housing efforts. Area Median Income (AMI) - Answer The midpoint in the family income range for a metropolitan statistical area or for the non-metropolitan parts of a state. Determined annually by HUD, the figure often is used as a basis to stratify incomes into very low, low, moderate, and above moderate. Frequently used to determine income eligibility for various housing programs. Arrearages - Answer The total amount of past due payments owed to a lender from a borrower in mortgage payments or to a landlord from a tenant in rental payments. Also called arrears. Assistance Animal - Answer An assistance animal is not considered a pet. it is an animal that works, provides assistance, or performs tasks for the benefit of a person with a disability, or provides emotional support that alleviates one or more identifies symptoms or effects of a person's disability. For purposes of reasonable accommodation requests, the Fair Housing Act does not require an assistance animal to be individually trained or certified. While dogs are the most common type of assistance animal, other animals can also be assistance animals. Association Dues - Answer Charged by a community or Homeowners Association to pay for repairs, upkeep, landscaping, improvements, and property management. Back-End Ratio - Answer A rate that calculates a borrower's total monthly debt, including housing and other debt obligations, as a percentage of gross monthly income. Frequently used by lenders to qualify borrowers for a mortgage. Also called a debt-to-income ratio. Balloon Payment - Answer An oversize payment due at the end of a mortgage. Blockbusting - Answer To convince, or attempt to convince, a person to sell or rent a dwelling because of the entry, or prospective entry, into the neighborhood of a person or persons of a particular race, color, religion, sex, familial status, national origin, or with a disability. Cash-for-keys - Answer An alternative to a legal eviction following foreclosure. The occupant receives cash funds from the servicer in exchange for turning in the keys and vacating the property. Certain conditions apply, such as returning the property in broom-clean condition and with all appliances. CDBG - Answer Community Development Block Grant CFPB - Answer Consumer Financial Protection Bureau Closing Costs - Answer Fees for final property transfer that are not included in the price of the property. Typical closing costs can include loan origination fees, discount points, appraisal fee, survey, title insurance, legal fees, real estate professional fees, prepayments of taxes and insurance, etc. While closing costs often range from 3% to 4% of the purchase price of the home, they can be lower or higher depending on the geographic region or loan type. Collection - Answer An account in default with an original creditor and sold to a third-party debt collector that will continue attempts to collect past due payments. Community Development Block Grant Program - Answer HUD program that provides grants to states and localities to provide decent housing and a suitable living environment and to expand economic opportunities, principally for low- and moderate-income persons. Complainant - Answer A person, group, or company that files a complaint which claims that someone has violated a law. Conciliation - Answer The attempted resolution of issues raised by a complaint, or by the investigation of such complaint, through informal negotiations involving the aggrieved person, the respondent, and the HUD Secretary. Conciliation Agreement - Answer A written agreement setting terms for the resolution of the issues in conciliation. Consolidated Plan - Answer A plan designed to help states and local jurisdictions to assess their affordable housing and community development needs and market conditions, and to make data-driven, location-based investment decisions. Conventional Loan - Answer A mortgage loan backed by private lenders. Though not insured by any government program, such as FHA or VA, loans with a down payment less than 20% of the purchase price may require private mortgage insurance. Conventional Mortgage - Answer A private sector loan typically issued to borrowers with high credit ratings. Excludes subprime loans or mortgages insured by the U.S. government. Credit Score - Answer The numerical interpretation of a consumer's creditworthiness based on information in his or her credit report. Debt-to-Income Ratio - Answer A rate that calculates a borrower's total monthly debt, including housing and other debt obligations, as a percentage of gross monthly income. Frequently used by lenders to qualify borrowers for a mortgage. Also called a back-end ratio. Deed-in-Lieu - Answer A process that allows a homeowner to avoid foreclosure, providing a deed "in lieu" of foreclosure to the lender. Except in certain states or by agreement between homeowner and servicer, the sale does necessarily satisfy the borrower's debt and may result in a deficiency judgement. Though it helps avoid foreclosure, the process does not allow the homeowner to stay in the home. Deed Restrictions - Answer Legally enforceable terms that govern the use of property. These terms are transferred with the property deed. Discriminatory deeds are illegal and unenforceable. Also known as a covenant, condition, restriction, or restrictive covenant. Default - Answer The inability to make timely payments or fulfill legal obligations of loan terms. Mortgage loans are typically considered in default when a payment has not been made after 60 to 90 days. Deficiency Judgement - Answer Assessment of liability by a court against a homeowner for the unpaid balance owed to the servicer after a foreclosure, short sale, or deed-in-lieu if the sale does not cover the full amount owed.