NMLS SAFE EXAM
Primary Mortgage Market correct answers Where credit institutions
originate loans
C. The maximum the rate can increase over the life of the loan correct
answers
an ARM hasWhenrate caps of 5/2/6, the 6 refers to
what?
A. The maximum rate increase at the initial
adjustment
B. The start rate for the
loan
C. The maximum the rate can increase over the life of
theThe
D. loanrate maximum the rate can decrease over the life of
the loan
B. The borrower qualified at the buydown rate correct answers When
utilizing a buydown to lower the interest rate on a FHA loan, which of the
temporary
following
correc are
tA. The borrower qualified at the
note
B. The rate
borrower qualified at the
buydown
C. The rate rate
cannot be more than 2% below the
note
D. rateor builder can pay the discount points to buydown
Seller
the rate
A. Age correct answers All of the following are violations of the Fair
Housing Act
EXCEPT
A.
Age
B. National
Origin
C.
Disability
D.Religio
n
Encrumbrance correct answers Claim against property held by one who is
not the legal
owne
r
Trigger Term correct answers Advertised term that requires additional
disclosures
Advertising Disclosure correct answers An advertisement must be
presented
and "clearly to keep from being deceptive, unfair, or
conspicuously"
otherwise violate a
Commission
rule
Waving Right of Rescission correct answers Extenuating circumstances such
as "bona
fide personal financial
emergency
Right of Rescission correct answers Right that borrowers have to cancel a
loan
of or line
credit with a lender within three days of
closing
Business Day correct answers When creditors office is open to the public,
a calendar
working day except Sunday or a federal
holiday
,Application correct answers Financial information used for purposes of
obtaining an
extension of
credit
Disclosure correct answers The act of making new
information known
FTC
Federal Trade Commission correct answers Mission is to promote consumer
protection
and eliminate and prevent anticompetitive business
practices
CFPB
Consumer Financial Protection Bureau correct answers Regulatory agency
charged
with overseeing financial products and services offered to
consumers
TILA
Truth in Lending Act correct answers Enacted 1968 promotes the
informed
consumeruse of by requiring disclosures about terms and costs and
credit
standardizes
manner the costs with borrowing are calculated and
in which
disclosed
Per Diem Interest correct answers Interest charged on a loan for one or
more days
Annual Interest Rate Formula correct answers Principal (X) Interest Rate
= Annual
Interest
Rate
Interest Only Mortgage correct answers Mortgage where the mortgagor is
only
to required
pay off the interest that arises from the principal that is borrowed for
a set period
Permanent Buydown correct answers Borrower chooses to pay additional
"discount
points" to buy down the interest rate for the life of the
mortgage note
2/1 Buydown correct answers Used on fixed rate loans over
two of
Set years
two initial temporary-start interest rates that increase in stair-step
fashion untilinterest
permanent a rate is
reached
Discount Point correct answers A form of pre-paid interest which effectively
increases
the yield on the loan above the amount of the stated
interest rate
CLTV
Combined Loan to Value correct answers An amount in addition to the Loan
to Value,
which simply represents the first position mortgage or loan as a
percentage of the
property's
value
LTV
Loan to Value correct answers Ratio of a loan to the value of an asset
purchased
PITI correct answers Principal, Interest, Taxes,
Insurance
,Refers to the components of a mortgage
payment
DIF correct answers Housing to
Debt
Ratio that measures an individual's ability to manage monthly payment and
repay debts
Forbearance correct answers Agreement between the lender and the
borrower to delay
foreclosur
e
Loan Modification correct answers A permanent restructuring of the
mortgage
one or more where
of the terms of a borrower's loan are changed to provide a more
affordable
payme
nt
Foreclosure correct answers Legal process to collect debt on
mortgaged property
Satisfaction of Mortgage Letter correct answers Document generated and
signed by a
mortgage lender, acknowledging that the borrower has paid off the
mortgage loan in full
and the mortgage is not a lien on the
property
Subordination Agreement correct answers When two mortgages are on a
property, which
specifies this mortgage takes
precedence
Payoff Statement correct answers Provides homeowner proof the mortgage
is paid off
Constructive Note correct answers Legal presumption that anything
recorded
public in a can be known by
record
anyone
Actual Note correct answers Direct knowledge that one has of the
property
Inquiry Note correct answers Information that should compel a reasonable
personfurther
make to inquiries about some aspect of the
property
Title Record correct answers Serves as a central repository of
information
parcel of about a
land
SRP
Service Release Premiums correct answers Payment received by lender
after Based
loan sellingon a market
value
GNM
A
Government National Mortgage Association correct answers Created in
1968, goal
expand to
affordable housing under
HUD
FNMA
Federal National Mortgage Association correct answers Created 1968
works with
Fannie Mae to increase affordable
lending
, FHA
Federal Housing Administration correct answers Insures banks real estate
loans and
charges borrowers a small
premium
HELOC
Home Equity Line of Credit correct answers A loan in which the lender
agrees to lend
maximum a within an agreed
amount
period
and is also an open-ended mortgage transaction that is
secured
HECM
Home Equity Conversion Mortgage correct answers A FHA insured reverse
mortgage
that allows the conversion of equity in a home
to cash
Balloon Mortgage correct answers A mortgage in which a large portion of
the borrowed
principal is repaid in a single payment at the end of the loan period
and does not
amortiz
e
ARM Interest Rate Adjustment correct answers Margin +
Interset = Rate
COFI
Cost of Fund Index correct answers Regional average of interest expenses
incurred by
financial institutions which in turn is used as a base for calculating
variable rate loans
ARM
Adjustable Rate Mortgage correct answers Loan that is lower than
fixed rate in
beginnin
g
Loan payment changes over
time
Adjustable caps that
vary
Used to obtain a higher loan
amount
Fixed Rate correct answers Interest rate that remains the same over the life
of the loan
Non-Conforming Loan correct answers Does not meet Freddie Mac or
Fannie Mae
guideline
s
Conforming Loan correct answers Conforms to terms and
conditions set by
governme
nt
Conventional Loan correct answers Not guaranteed or insured by the
government
can but
still follow federal
guidelines
Acceleration Clause correct answers Accelerated loan repayment if
property is in
defaul
t
Exculpatory Clause correct answers Relieves one party form liability due to
actions of
another
party
Primary Mortgage Market correct answers Where credit institutions
originate loans
C. The maximum the rate can increase over the life of the loan correct
answers
an ARM hasWhenrate caps of 5/2/6, the 6 refers to
what?
A. The maximum rate increase at the initial
adjustment
B. The start rate for the
loan
C. The maximum the rate can increase over the life of
theThe
D. loanrate maximum the rate can decrease over the life of
the loan
B. The borrower qualified at the buydown rate correct answers When
utilizing a buydown to lower the interest rate on a FHA loan, which of the
temporary
following
correc are
tA. The borrower qualified at the
note
B. The rate
borrower qualified at the
buydown
C. The rate rate
cannot be more than 2% below the
note
D. rateor builder can pay the discount points to buydown
Seller
the rate
A. Age correct answers All of the following are violations of the Fair
Housing Act
EXCEPT
A.
Age
B. National
Origin
C.
Disability
D.Religio
n
Encrumbrance correct answers Claim against property held by one who is
not the legal
owne
r
Trigger Term correct answers Advertised term that requires additional
disclosures
Advertising Disclosure correct answers An advertisement must be
presented
and "clearly to keep from being deceptive, unfair, or
conspicuously"
otherwise violate a
Commission
rule
Waving Right of Rescission correct answers Extenuating circumstances such
as "bona
fide personal financial
emergency
Right of Rescission correct answers Right that borrowers have to cancel a
loan
of or line
credit with a lender within three days of
closing
Business Day correct answers When creditors office is open to the public,
a calendar
working day except Sunday or a federal
holiday
,Application correct answers Financial information used for purposes of
obtaining an
extension of
credit
Disclosure correct answers The act of making new
information known
FTC
Federal Trade Commission correct answers Mission is to promote consumer
protection
and eliminate and prevent anticompetitive business
practices
CFPB
Consumer Financial Protection Bureau correct answers Regulatory agency
charged
with overseeing financial products and services offered to
consumers
TILA
Truth in Lending Act correct answers Enacted 1968 promotes the
informed
consumeruse of by requiring disclosures about terms and costs and
credit
standardizes
manner the costs with borrowing are calculated and
in which
disclosed
Per Diem Interest correct answers Interest charged on a loan for one or
more days
Annual Interest Rate Formula correct answers Principal (X) Interest Rate
= Annual
Interest
Rate
Interest Only Mortgage correct answers Mortgage where the mortgagor is
only
to required
pay off the interest that arises from the principal that is borrowed for
a set period
Permanent Buydown correct answers Borrower chooses to pay additional
"discount
points" to buy down the interest rate for the life of the
mortgage note
2/1 Buydown correct answers Used on fixed rate loans over
two of
Set years
two initial temporary-start interest rates that increase in stair-step
fashion untilinterest
permanent a rate is
reached
Discount Point correct answers A form of pre-paid interest which effectively
increases
the yield on the loan above the amount of the stated
interest rate
CLTV
Combined Loan to Value correct answers An amount in addition to the Loan
to Value,
which simply represents the first position mortgage or loan as a
percentage of the
property's
value
LTV
Loan to Value correct answers Ratio of a loan to the value of an asset
purchased
PITI correct answers Principal, Interest, Taxes,
Insurance
,Refers to the components of a mortgage
payment
DIF correct answers Housing to
Debt
Ratio that measures an individual's ability to manage monthly payment and
repay debts
Forbearance correct answers Agreement between the lender and the
borrower to delay
foreclosur
e
Loan Modification correct answers A permanent restructuring of the
mortgage
one or more where
of the terms of a borrower's loan are changed to provide a more
affordable
payme
nt
Foreclosure correct answers Legal process to collect debt on
mortgaged property
Satisfaction of Mortgage Letter correct answers Document generated and
signed by a
mortgage lender, acknowledging that the borrower has paid off the
mortgage loan in full
and the mortgage is not a lien on the
property
Subordination Agreement correct answers When two mortgages are on a
property, which
specifies this mortgage takes
precedence
Payoff Statement correct answers Provides homeowner proof the mortgage
is paid off
Constructive Note correct answers Legal presumption that anything
recorded
public in a can be known by
record
anyone
Actual Note correct answers Direct knowledge that one has of the
property
Inquiry Note correct answers Information that should compel a reasonable
personfurther
make to inquiries about some aspect of the
property
Title Record correct answers Serves as a central repository of
information
parcel of about a
land
SRP
Service Release Premiums correct answers Payment received by lender
after Based
loan sellingon a market
value
GNM
A
Government National Mortgage Association correct answers Created in
1968, goal
expand to
affordable housing under
HUD
FNMA
Federal National Mortgage Association correct answers Created 1968
works with
Fannie Mae to increase affordable
lending
, FHA
Federal Housing Administration correct answers Insures banks real estate
loans and
charges borrowers a small
premium
HELOC
Home Equity Line of Credit correct answers A loan in which the lender
agrees to lend
maximum a within an agreed
amount
period
and is also an open-ended mortgage transaction that is
secured
HECM
Home Equity Conversion Mortgage correct answers A FHA insured reverse
mortgage
that allows the conversion of equity in a home
to cash
Balloon Mortgage correct answers A mortgage in which a large portion of
the borrowed
principal is repaid in a single payment at the end of the loan period
and does not
amortiz
e
ARM Interest Rate Adjustment correct answers Margin +
Interset = Rate
COFI
Cost of Fund Index correct answers Regional average of interest expenses
incurred by
financial institutions which in turn is used as a base for calculating
variable rate loans
ARM
Adjustable Rate Mortgage correct answers Loan that is lower than
fixed rate in
beginnin
g
Loan payment changes over
time
Adjustable caps that
vary
Used to obtain a higher loan
amount
Fixed Rate correct answers Interest rate that remains the same over the life
of the loan
Non-Conforming Loan correct answers Does not meet Freddie Mac or
Fannie Mae
guideline
s
Conforming Loan correct answers Conforms to terms and
conditions set by
governme
nt
Conventional Loan correct answers Not guaranteed or insured by the
government
can but
still follow federal
guidelines
Acceleration Clause correct answers Accelerated loan repayment if
property is in
defaul
t
Exculpatory Clause correct answers Relieves one party form liability due to
actions of
another
party
