NATIONAL AND UST MORTGAGE PRACTICE EXAM 2 |
QUIZ SMART | SCORE HIGH | GUARANTEED
ACCURACY!
Stan has been in his house for 15 years and built up $100,000 in equity. He decides to
do some remodeling and pay off some bills, and he wants to use a closed-end home
equity loan to pay for it. He meets with Lending Guys and, because he has a great
credit history, gets loan approval right away. Two weeks later he signs the documents.
Which of the following is true?
A. Stan may rescind the loan at any time during the term of the loan
B. Stan's loan is not subject to provisions of the Real Estate Settlement Procedures Act
C. Lending Guys was required to provide Stan with a copy of the Special Information
Booklet within three days after he submitted the application
D. Stan was required to provide Lending Guys with a Certificate of Completion prior to
signing his final documents, indicating that he has completed homeownership
counseling with a HUD-approved provider - Answer: C. Lending Guys was required to
provide Stan with a copy of the Special Information Booklet within three days after he
submitted the application
A borrower taking a closed-end home equity loan must be provided with a copy of the
Special Information Booklet within three days after submission of the application. A
borrower is NOT required to complete homeownership counseling unless the loan is a
high-cost home loan. Stan may rescind his loan in accordance with TILA's right of
rescission; however, this right does not extend for the entire term of the loan.
A "straw buyer" is:
A. A buyer who is a victim of identity theft
B. A buyer who uses another individual's identity in order to obtain a mortgage for which
he or she is not eligible
1
APPHIA - Crafted with Care and Precision for Academic Excellence.
,C. A buyer who accepts a fee for the use of his or her Social Security Number and other
personal information on a mortgage application
D. A buyer who intends to purchase property but does not intend to occupy it - Answer:
C. A buyer who accepts a fee for the use of his or her Social Security Number and other
personal information on a mortgage application
A straw buyer is a person who purchases the property or applies for the loan in his or
her own name for the actual borrower and is typically paid for the use of his or her
personally identifying information.
Under the Fair Housing Act:
A. Lending decisions cannot be made based on residency status
B. Charging different fees based on race is prohibited
C. Lenders must provide clear, plain-language disclosures
D. Lenders are required to report demographic information to the federal government -
Answer: B. Charging different fees based on race is prohibited
The Fair Housing Act prohibits discrimination in the sale, rental, and financing of any
residential housing based on race, color, religion, national origin, sex, familial status, or
mental or physical handicap, and therefore, prohibits charging different fees based on
race. Residency status is not a protected category under the Fair Housing Act.
Disclosure requirements are not imposed by the Fair Housing Act. Government
reporting requirements are covered under the Home Mortgage Disclosure Act (HMDA).
This term refers to the practice of adjusting certain types of non-taxable income during
underwriting.
A. Flopping
B. Inflating
C. Ballparking
2
APPHIA - Crafted with Care and Precision for Academic Excellence.
, D. Grossing up - Answer: D. Grossing up
Certain types of income may be grossed-up during underwriting. Underwriters may
gross-up Social Security income, child support, and some other forms of income,
subject to limitations based on product type and other guidelines.
According to the S.A.F.E. Act, all of the following are nontraditional loan products,
except:
A. Interest-only ARMs
B. Hybrid ARMs
C. Reverse mortgages with fixed rates
D. Interest-only fixed-rate 30-year mortgage loans - Answer: D. Interest-only fixed-rate
30-year mortgage loans
The S.A.F.E. Act defines a nontraditional loan as any loan product other than a 30-year
fixed mortgage. All ARMs have rates that are adjustable. A reverse mortgage does not
have a 30-year loan term and may have either a fixed rate or adjustable rate of interest.
An interest-only loan is considered a traditional loan under the S.A.F.E. Act definition if it
has a fixed rate and a 30-year term, even though the period of interest-only payments
would be only five, 10, or 15 years. High-risk loans that might still be considered
"traditional" under the S.A.F.E. Act include interest-only fixed-rate, no-money-down,
subprime, and alternative-documentation (Alt-A) loans.
A husband and wife own their home as joint tenants. When the husband dies, what
happens to his share in the property?
A. Transfers according to the probate code
B. Transfers to the husband's heirs
C. Transfers to the wife
D. Transfers intestate - Answer: C. Transfers to the wife
3
APPHIA - Crafted with Care and Precision for Academic Excellence.
QUIZ SMART | SCORE HIGH | GUARANTEED
ACCURACY!
Stan has been in his house for 15 years and built up $100,000 in equity. He decides to
do some remodeling and pay off some bills, and he wants to use a closed-end home
equity loan to pay for it. He meets with Lending Guys and, because he has a great
credit history, gets loan approval right away. Two weeks later he signs the documents.
Which of the following is true?
A. Stan may rescind the loan at any time during the term of the loan
B. Stan's loan is not subject to provisions of the Real Estate Settlement Procedures Act
C. Lending Guys was required to provide Stan with a copy of the Special Information
Booklet within three days after he submitted the application
D. Stan was required to provide Lending Guys with a Certificate of Completion prior to
signing his final documents, indicating that he has completed homeownership
counseling with a HUD-approved provider - Answer: C. Lending Guys was required to
provide Stan with a copy of the Special Information Booklet within three days after he
submitted the application
A borrower taking a closed-end home equity loan must be provided with a copy of the
Special Information Booklet within three days after submission of the application. A
borrower is NOT required to complete homeownership counseling unless the loan is a
high-cost home loan. Stan may rescind his loan in accordance with TILA's right of
rescission; however, this right does not extend for the entire term of the loan.
A "straw buyer" is:
A. A buyer who is a victim of identity theft
B. A buyer who uses another individual's identity in order to obtain a mortgage for which
he or she is not eligible
1
APPHIA - Crafted with Care and Precision for Academic Excellence.
,C. A buyer who accepts a fee for the use of his or her Social Security Number and other
personal information on a mortgage application
D. A buyer who intends to purchase property but does not intend to occupy it - Answer:
C. A buyer who accepts a fee for the use of his or her Social Security Number and other
personal information on a mortgage application
A straw buyer is a person who purchases the property or applies for the loan in his or
her own name for the actual borrower and is typically paid for the use of his or her
personally identifying information.
Under the Fair Housing Act:
A. Lending decisions cannot be made based on residency status
B. Charging different fees based on race is prohibited
C. Lenders must provide clear, plain-language disclosures
D. Lenders are required to report demographic information to the federal government -
Answer: B. Charging different fees based on race is prohibited
The Fair Housing Act prohibits discrimination in the sale, rental, and financing of any
residential housing based on race, color, religion, national origin, sex, familial status, or
mental or physical handicap, and therefore, prohibits charging different fees based on
race. Residency status is not a protected category under the Fair Housing Act.
Disclosure requirements are not imposed by the Fair Housing Act. Government
reporting requirements are covered under the Home Mortgage Disclosure Act (HMDA).
This term refers to the practice of adjusting certain types of non-taxable income during
underwriting.
A. Flopping
B. Inflating
C. Ballparking
2
APPHIA - Crafted with Care and Precision for Academic Excellence.
, D. Grossing up - Answer: D. Grossing up
Certain types of income may be grossed-up during underwriting. Underwriters may
gross-up Social Security income, child support, and some other forms of income,
subject to limitations based on product type and other guidelines.
According to the S.A.F.E. Act, all of the following are nontraditional loan products,
except:
A. Interest-only ARMs
B. Hybrid ARMs
C. Reverse mortgages with fixed rates
D. Interest-only fixed-rate 30-year mortgage loans - Answer: D. Interest-only fixed-rate
30-year mortgage loans
The S.A.F.E. Act defines a nontraditional loan as any loan product other than a 30-year
fixed mortgage. All ARMs have rates that are adjustable. A reverse mortgage does not
have a 30-year loan term and may have either a fixed rate or adjustable rate of interest.
An interest-only loan is considered a traditional loan under the S.A.F.E. Act definition if it
has a fixed rate and a 30-year term, even though the period of interest-only payments
would be only five, 10, or 15 years. High-risk loans that might still be considered
"traditional" under the S.A.F.E. Act include interest-only fixed-rate, no-money-down,
subprime, and alternative-documentation (Alt-A) loans.
A husband and wife own their home as joint tenants. When the husband dies, what
happens to his share in the property?
A. Transfers according to the probate code
B. Transfers to the husband's heirs
C. Transfers to the wife
D. Transfers intestate - Answer: C. Transfers to the wife
3
APPHIA - Crafted with Care and Precision for Academic Excellence.
