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As a general rule, the APR is considered accurate if the variance is not more than ___% above or below the APR previously disclosed.
1/8th of a percent for a regular loan.
The Dodd-Frank Act includes the following appraisal related activities.
- Brokers can no longer order appraisals directly from appraisers.
- Customers can no longer pay appraisers directly for any appraisal services.
- Appraisal independence is a major objective.
- HVCC prohibits anyone who will receive a direct benefit if a loan closes from being involved in the appraiser selection.
Under RESPA section 8, referral fees may be paid to
A mortgage lender advertises that a home equity loan is a special tax deductible product. Has a TILA violation occured?
Yes. TILA, Reg Z, prohibit the use of any misleading statement regarding the tax benefits of a home equity plan.
An Arm loan has the following characteristics: start rate 5%, margin 2%, caps 2/6. What is the index at the beginning of the loan.
If a MLO turned down an applicant because some of the income comes from public assistance. Which Act would they be violating?
ECOA, Reg B, was created to prohibit discrimination in the extension of credit primarily related to certain prohibited factors.
Private mortgage insurance is designed to:
Protect the lender financing a conventional loan. It requires that the borrower provide PMI if the LTV is more than 80%.
If the lender collects $8,000 in interest a year on a $150,000 loan, what is the interest rate?
- =(interest/loan amount) x100
In a mortgage title policy who is the policy holder?
The lender. Remember the lender is the mortgagee.
Which document would a borrower look at to confirm prepayment penalties?
The TIL disclosure and the promissary note
What is a service release premium?
Fee a lender recieves for transferring or selling the loan servicing rights
A borrower has 401k retirement of $27,941. How does a loan officer disclose the value of the assets on the 1003.
($27,941 * 60%) = $16,764
The Interagency Guidance on Non traditional mortgage products cosiders the following as a non traditional mortgage products
Balloon, ARM & Interest only products
Who prepares the HUD1 form?
On the first page of the loan application, the amount listed represents which figure?
Loan amount based on LTV
What's the max seller contribution for an INVESTMENT property utilizing conventional terms?
A property is valued at $250,000. There's a 1st & 2nd mortgage with a 80% CLTV. The 2nd mortgage is 10% of the property value. What is the amount of the first mortgage?
- CLTV = Value x 80% = $200,000
- 2nd mtg = value x 10% = $25,000
- 1st mtg = $200,000 - $25,000 = $175,000
How does HUD interpret the origination requirements under the SAFE Act?
An individual must comply with licensing and registry requirements of a state in order to engage in the business of a loan originator with respect to any residential property in that state, regardless of whether the individual or the prospective borrower is located in the state.
What agency is charged with the responsibility of protecting consumers from deceptive and unfair practices?
Consumer Financial Protection Bureau under the FTC
What percentage of down payment is required on USDA/RHS loans?
What is the fee the lender pays for offering a borrower a rate above par?
Yield Spread Premium
Which document extends temporary coverage prior to the issuance of the policy?
Temporary insurance binder
Charging a fee for preparing a HUD1 would be in violation to which Act?
Real Estate Settlement Proceedure Act. No fee may be charged for preparing the settlement statement or the escrow account statement or any disclosures required by the Truth In Lending Act.
Calculate the per diem interest assuming a 365 day year. Loan amount $200,000 and an interest rate of 5.25%
- Per diem interest = loan * rate/365. Per diem is interest per day.
The following refinance transactions are transactions that are designed to provide cash back.
Cash Out, Limited cash out, Debt consolidation
What is the additional fee a lender or title company may charge to prepare closing documents?
Document preperation fee.
What is the temporary purpose of an appraisal?
To establish an objective opinion of the value of the property.
Under the Fair Housing Act the following individuals would NOT be defined as handicapped
A person who illegally uses and is addicted to a controlled substance. A heroin addict is not handicapped.
Would the cost of leads determined by the potential loan amount by the lead generation company be permitted by RESPA?
No! Prohibits the purchase of leads in any way tied to performance.
Which document records any changes to the current terms and agreement of the PC?
A jumbo loan is considered a
non conforming loan that does not meet the conforming secondary underwriting standards.
How is the mortgage limit determined for FHA?
By market areas and counties within the area
Freddie Mac's automated underwriting system is
LP Loan Prospector
Supplying false information on a loan application is
What is owner occupancy fraud?
When someone buys a house as owner occupant but uses it as an investment.
The process where the trustee holds title via a deed of trust is known as:
A state may use mutual corporation to ensure another state determination that its own SAFE Act compliant licensing requirements have been met. This is reffered to as
What phrase describes some fees paid in advance of settlement?
Paid outside of closing
What would not be covered under RESPA?
25 acres or more are exempt
Which appraisal form is used for single unit properties in condo projects?
A client is paying $100,000 for a house. His down payment will be 15%. He has already paid $5,000 in earnest money. How much more does he have to pay to complete the down payment?
- $100,000 * 15% = $15,000 - $5,000 EMD = $10,000
Is a servicing disclosure statement required on a HELOC?
No, servicing disclosures are required within 3 business days of receiving an application for a closed end loan
Which of the following would not be included in the TIL disclosures?
Escrow amount is a RESPA related item and would be included in RESPA disclosures. Not TILA disclosures.
A borrower has decided on a 5/1 ARM loan with a starting rate of 4.75% with 2/2/6 caps. The loan closed in August 2005. What is the month and rate of the second adjustment period if the first adjustment period had no changes and the current margin is 2.25% and the index is 3.25%?
5.5% is the lower of the 2 calculations.
FCRA was created to provide consumer protections, the following is NOT correct:
collections remain on the credit report for 10 years
FCRA provides regulations for credit reporting agencies
FCRA was extended perminently in 2003
FCRA requires an adverse summary for a credit denial
Collections remain on the credit report for 7 years not 10. Bankrupcy is 10 years.
What is an AIR loan?
A ficticious borrower, ficticious property and fraudulant activity
Which of the following is not used to determine a credit score?
bills paid on time but not reported to credit bureaus
bills paid on time but not reported to credit bureaus
Interagency guidance on non traditional mortgage products considers subprime loans as
What's the purpose of Reg B?
ECOA, prohibits discrimination in any aspect of the credit transaction.
A settlement service provider refers a loan applicant to an affilliated business for settlement services, disclosure of affilliated business arrangement is due:
No later than at the time of the referral
This loan program cannot be obtained through a program of the federal government.
What is the mortgage called where the principal remains the same when payments are made?
Personally held beliefs, codes of action or guides to good and evil are:
A husband and wife are co-owners of their primary residence. They are entering into a refinance transaction. The husband receives a copy of the notice to recind, however, the wife receives no disclosures. What is the deadline for recission?
What's the RESPA policy on lender mark ups for third party fees collected on behalf of the third party?
Mark ups on third party fees to earn a profit are prohibited.
What is the item that protects the homeowner against damage claims from acts in the past?
Owner's title insurance policy
Which of the 4 C's do lenders use to determine if a borrower will be financially able to meet the demands of a loan repayment?
Capacity is the ability to meet the loan payment obligation.
An unlawful practice historically involved lenders designating neighborhoods where they would not extend credit for home loans to borrowers generally form a specific ethnic group
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