NATIONAL AND UST MORTGAGE PRACTICE EXAM 2 QUESTIONS AND CORRECT ANSWERS

NATIONAL AND UST MORTGAGE
PRACTICE EXAM 2 QUESTIONS AND
CORRECT ANSWERS
UnderA2RESPA,A2theA2servicerA2mayA2requireA2aA2borrowerA2toA2payA2intoA2anA2escrowA2a
ccountA2toA2coverA2disbursementsA2thatA2areA2unanticipatedA2orA2disbursementsA2madeA2
beforeA2theA2borrower'sA2monthlyA2paymentsA2areA2availableA2inA2theA2account,A2aA2cushi
onA2orA2reserveA2thatA2mustA2beA2noA2greaterA2thanA2_____A2ofA2theA2estimatedA2totalA2an
nualA2disbursementsA2fromA2theA2escrowA2account.A2-A2Ans--
TheA2answerA2isA2oneA2sixth.A2
UnderA2RESPA,A2aA2lenderA2mayA2requireA2theA2borrowerA2toA2establishA2anA2escrowA2ac
countA2atA2closing.A2TheA2loanA2servicerA2mayA2requireA2aA2borrowerA2toA2payA2intoA2theA2
accountA2toA2coverA2disbursementsA2thatA2areA2unanticipatedA2orA2disbursementsA2made
A2beforeA2theA2borrower'sA2monthlyA2paymentsA2areA2availableA2inA2theA2account.A2ThisA2i
sA2theA2escrowA2cushionA2orA2reserve,A2whichA2mustA2beA2noA2greaterA2thanA2oneA2sixthA2
ofA2theA2estimatedA2totalA2annualA2disbursementsA2fromA2theA2escrowA2account.

StanA2hasA2beenA2inA2hisA2houseA2forA215A2yearsA2andA2builtA2upA2$100,000A2inA2equity.A2
HeA2decidesA2toA2doA2someA2remodelingA2andA2payA2offA2someA2bills,A2andA2heA2wantsA2t
oA2useA2aA2closed-
endA2homeA2equityA2loanA2toA2payA2forA2it.A2HeA2meetsA2withA2LendingA2GuysA2and,A2beca
useA2heA2hasA2aA2greatA2creditA2history,A2getsA2loanA2approvalA2rightA2away.A2TwoA2week
sA2laterA2heA2signsA2theA2documents.A2WhichA2ofA2theA2followingA2isA2true?A2-A2Ans--
TheA2answerA2isA2StanA2mayA2rescindA2theA2loanA2withinA23A2businessA2daysA2ofA2consum
mation.A2
AA2borrowerA2refinancingA2aA2primaryA2dwellingA2withA2anA2openA2orA2closedA2endA2loanA2
mayA2cancelA2(rescind)A2theA2loanA2withinA23A2businessA2daysA2followingA2closing.A2ThisA2
rightA2doesA2notA2extendA2toA2theA2entireA2term.A2AA2borrowerA2isA2NOTA2requiredA2toA2co
mpleteA2homeownershipA2counselingA2unlessA2theA2loanA2isA2aA2high-costA2homeA2loan.

ForA2whichA2ofA2theA2followingA2reasonsA2wouldA2itA2beA2permissibleA2toA2refuseA2toA2take
A2anA2applicationA2fromA2aA2potentialA2borrower?A2-A2Ans--
TheA2answerA2isA2theA2applicantA2hasA2alludedA2toA2theA2factA2thatA2heA2isA2submittingA2fal
seA2documentsA2inA2orderA2toA2qualifyA2forA2aA2largerA2loan.A2
AA2loanA2originatorA2shouldA2notA2beA2anA2accessoryA2toA2fraudA2byA2takingA2anA2applicati
onA2basedA2onA2whatA2heA2knowsA2orA2stronglyA2suspectsA2toA2beA2fraudulentA2informatio
n.A2InA2allA2otherA2cases,A2creditA2decisionsA2shouldA2beA2leftA2toA2theA2lenderA2and/
orA2itsA2underwritingA2department,A2andA2shouldA2neverA2beA2basedA2onA2discriminatoryA2
factorsA2orA2personalA2whimsA2(notA2"clicking"A2withA2theA2applicantA2orA2denyingA2access
A2toA2creditA2basedA2onA2neighborhood).


WhichA2ofA2theA2followingA2isA2trueA2regardingA2APRA2toleranceA2levels?A2-A2Ans--
TheA2answerA2isA2TheA2APRA2isA2consideredA2accurateA2ifA2itA2isA2notA2moreA2thanA2oneA2

,eighthA2ofA2oneA2percentageA2pointA2(.125%)A2aboveA2orA2belowA2theA2APRA2determinedA
2inA2accordanceA2withA2legalA2requirements.A2
TheA2APRA2isA2consideredA2accurateA2generally,A2ifA2itA2isA2notA2moreA2thanA2oneA2eighthA
2ofA2oneA2percentageA2pointA2(.125%)A2aboveA2orA2belowA2theA2APRA2determinedA2inA2ac
cordanceA2withA2legalA2requirementsA2(i.e.,A2inA2accordanceA2withA2theA2actuarialA2metho
dA2orA2theA2UnitedA2StatesA2RuleA2method);A2andA2inA2anA2irregularA2transaction,A2ifA2itA2is
A2notA2moreA2thanA2oneA2quarterA2ofA2oneA2percentageA2pointA2(.25%)A2aboveA2orA2belowA
2theA2annualA2percentageA2rateA2determinedA2inA2accordanceA2withA2legalA2requirements.


MortgageA2insuranceA2insuresA2againstA2lossesA2incurredA2asA2aA2resultA2of:A2-A2Ans--
TheA2answerA2isA2foreclosure.A2
PrivateA2mortgageA2insuranceA2(PMI)A2isA2anA2insuranceA2policyA2issuedA2toA2provideA2pr
otectionA2toA2theA2mortgageA2lenderA2inA2theA2eventA2ofA2financialA2lossA2dueA2toA2aA2borr
ower'sA2defaultA2thatA2resultsA2inA2foreclosure.A2InA2theA2eventA2ofA2aA2foreclosure,A2theA2i
nsuranceA2companyA2willA2eitherA2purchaseA2theA2loanA2orA2letA2theA2lenderA2forecloseA2a
ndA2payA2theA2lenderA2forA2itsA2lossesA2upA2toA2theA2faceA2amountA2ofA2theA2policy.

AA2"strawA2buyer"A2is:A2-A2Ans--
TheA2answerA2isA2aA2buyerA2whoA2acceptsA2aA2feeA2forA2theA2useA2ofA2hisA2orA2herA2Social
A2SecurityA2NumberA2andA2otherA2personalA2informationA2onA2aA2mortgageA2application.A2
AA2strawA2buyerA2isA2aA2personA2whoA2purchasesA2theA2propertyA2orA2appliesA2forA2theA2lo
anA2inA2hisA2orA2herA2ownA2nameA2forA2theA2actualA2borrowerA2andA2isA2typicallyA2paidA2for
A2theA2useA2ofA2hisA2orA2herA2personallyA2identifyingA2information.


UnderA2theA2FairA2HousingA2Act:A2-A2Ans--
TheA2answerA2isA2chargingA2differentA2feesA2basedA2onA2raceA2isA2prohibited.A2
TheA2FairA2HousingA2ActA2prohibitsA2discriminationA2inA2theA2sale,A2rental,A2andA2financin
gA2ofA2anyA2residentialA2housingA2basedA2onA2race,A2color,A2religion,A2nationalA2origin,A2se
x,A2familialA2status,A2orA2mentalA2orA2physicalA2handicap,A2andA2therefore,A2prohibitsA2cha
rgingA2differentA2feesA2basedA2onA2race.A2ResidencyA2statusA2isA2notA2aA2protectedA2categ
oryA2underA2theA2FairA2HousingA2Act.A2DisclosureA2requirementsA2areA2notA2imposedA2byA
2theA2FairA2HousingA2Act.A2GovernmentA2reportingA2requirementsA2areA2coveredA2underA2
theA2HomeA2MortgageA2DisclosureA2ActA2(HMDA).

ThisA2termA2refersA2toA2theA2practiceA2ofA2adjustingA2certainA2typesA2ofA2non-
taxableA2incomeA2duringA2underwriting.A2-A2Ans--TheA2answerA2isA2grossingA2up.A2
CertainA2typesA2ofA2incomeA2mayA2beA2grossed-
upA2duringA2underwriting.A2UnderwritersA2mayA2gross-
upA2SocialA2SecurityA2income,A2childA2support,A2andA2someA2otherA2formsA2ofA2income,A2s
ubjectA2toA2limitationsA2basedA2onA2productA2typeA2andA2otherA2guidelines.

WhichA2federalA2lawA2requiresA2individualsA2toA2passA2aA2writtenA2examA2inA2orderA2toA2ob
tainA2aA2mortgageA2loanA2originatorA2license?A2-A2Ans--
TheA2answerA2isA2SecureA2andA2FairA2EnforcementA2forA2MortgageA2LicensingA2Act.A2
UnderA2theA2SecureA2andA2FairA2EnforcementA2forA2MortgageA2LicensingA2ActA2(theA2SAF
EA2Act),A2anA2applicantA2forA2aA2mortgageA2loanA2originatorA2licenseA2mustA2passA2aA2writt

, enA2nationalA2testA2developedA2byA2theA2NMLSA2andA2administeredA2byA2anA2approvedA2t
estA2providerA2thatA2coversA2ethics,A2federalA2andA2stateA2law,A2andA2regulationsA2pertaini
ngA2toA2mortgageA2origination,A2fraud,A2consumerA2protection,A2theA2nontraditionalA2mort
gageA2marketplace,A2andA2fairA2lendingA2issues.A2ToA2pass,A2theA2individualA2mustA2achie
veA2aA2testA2scoreA2ofA2atA2leastA275%.

ForA2anA2FHAA2loanA2thatA2requiresA2MIP,A2theA2annualA2mortgageA2insuranceA2premiumA
2(payableA2monthlyA2asA2partA2ofA2theA2mortgageA2payment),A2isA2basedA2onA2allA2ofA2theA
2following,A2except:A2-A2Ans--
TheA2answerA2isA2stateA2inA2whichA2theA2subjectA2propertyA2isA2located.A2
TheA2FHAA2fundsA2insuranceA2fromA2aA2mortgageA2insuranceA2premiumA2(MIP)A2charged
A2toA2theA2borrower.A2MostA2FHAA2mortgagesA2requireA2paymentA2ofA2anA2upfrontA2mortg
ageA2insuranceA2premiumA2(UFMIP).A2TheA2UFMIPA2isA2nonrefundableA2(exceptA2toA2theA
2extentA2thatA2aA2portionA2mayA2beA2appliedA2toA2theA2UFMIPA2ofA2anotherA2FHA-
insuredA2mortgageA2withinA2threeA2years).A2InA2addition,A2mostA2FHAA2loansA2requireA2pa
ymentA2ofA2anA2annualA2mortgageA2insuranceA2premium,A2payableA2monthlyA2asA2partA2of
A2theA2mortgageA2payment.A2ThisA2premiumA2isA2basedA2onA2theA2loanA2program,A2theA2lo
anA2term,A2andA2theA2loan-to-valueA2(LTV)A2ratio.

ApplicantsA2forA2FHAA2loansA2mustA2meetA2aA2backA2endA2ratioA2of:A2-A2Ans--
TheA2answerA2isA243%.A2
InA2general,A2applicantsA2forA2FHAA2loansA2mustA2meetA2aA2backA2endA2ratioA2limitationA2o
fA243%.

SupervisoryA2authorityA2affordedA2toA2stateA2agenciesA2overA2theA2mortgageA2industryA2all
owsA2themA2toA2imposeA2allA2ofA2theA2followingA2sanctions,A2except:A2-A2Ans--
TheA2answerA2isA2assessA2jailA2timeA2forA2fraudulentA2activities.A2UnderA2theA2SAFEA2Act,
A2theA2authorityA2ofA2stateA2agenciesA2allowsA2themA2toA2imposeA2sanctionsA2includingA2s
uspending,A2revoking,A2orA2refusingA2toA2renewA2aA2licenseA2inA2responseA2toA2violations;
A2orderingA2restitutionA2andA2imposingA2fines;A2andA2issuingA2ordersA2orA2directives,A2inclu
dingA2orderingA2orA2directingA2licenseesA2toA2ceaseA2andA2desistA2fromA2conductingA2busi
ness,A2includingA2immediateA2temporaryA2ordersA2toA2ceaseA2andA2desist.A2TheA2agencie
sA2areA2notA2authorizedA2toA2assessA2jailA2timeA2toA2licenseesA2forA2anyA2reason.

AccordingA2toA2theA2S.A.F.E.A2Act,A2allA2ofA2theA2followingA2areA2nontraditionalA2loanA2pro
ducts,A2except:A2-A2Ans--TheA2answerA2isA2interest-onlyA230-yearA2mortgageA2loans.A2
TheA2S.A.F.E.A2ActA2definesA2aA2nontraditionalA2loanA2asA2anyA2loanA2productA2otherA2tha
nA2aA230-
yearA2fixedA2mortgage.A2AllA2ARMsA2haveA2ratesA2thatA2areA2adjustable.A2AA2reverseA2mo
rtgageA2doesA2notA2haveA2aA230-
yearA2loanA2termA2andA2mayA2haveA2eitherA2aA2fixedA2rateA2orA2adjustableA2rateA2ofA2intere
st.A2AnA2interest-
onlyA2loanA2isA2consideredA2aA2traditionalA2loanA2underA2theA2S.A.F.E.A2ActA2definitionA2ifA
2itA2hasA2aA2fixedA2rateA2andA2aA230-yearA2term,A2evenA2thoughA2theA2periodA2ofA2interest-
onlyA2paymentsA2wouldA2beA2onlyA2five,A210,A2orA215A2years.A2High-
riskA2loansA2thatA2mightA2stillA2beA2consideredA2"traditional"A2underA2theA2S.A.F.E.A2ActA2in