FEDERAL MORTGAGE PRACTICE

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FEDERAL MORTGAGE PRACTICE
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2010-08-03 03:15:55
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FEDERAL MORTGAGE PRACTICE
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  1. The penalities for paying or accepting an illegal referral fee are:

    A. fines of up to $5,000 and up to 1 year in prison
    B. fines of up to $10,000 and up to 3 years in prison
    C. fines of up to $20,000 and up to 1 year in prison
    D. fines of up to $10,000 and up to 1 year in prison
    D. fines of up to $10,000 and up to 1 year in prison
    (this multiple choice question has been scrambled)
  2. Finance charges always include which of the following?

    A. mortgage broker fee
    B. title insurance charges
    C. document preparation fees
    D. credit report fee
    A. mortgage broker fee
    (this multiple choice question has been scrambled)
  3. A loan contains prepayment penalities. Which of the following documents would a borrower review to confirm this?

    A. Mortgage Servicing Disclosure
    B. HUD-1 and the GFE
    C. Deed of Trust
    D. TIL Disclosure and promissory note
    D. TIL Disclosure and promissory note
    (this multiple choice question has been scrambled)
  4. For the purposes of rescinding a loan transaction, "business days" includes every day of the week except:

    A. Saturdays and Sundays
    B. Sundays
    C. Federal holidays
    D. Sundays and Federal holidays
    D. Sundays and Federal holidays
    (this multiple choice question has been scrambled)
  5. Five siblings have ownership rights to a property. If a refinance transaction affecting the property is subject to rescission, how many of these individuals must submit a rescission notice in order to void the loan?

    A. a majority of the five
    B. any one of the five
    C. all five
    D. at least two of the five
    B. any one of the five
    (this multiple choice question has been scrambled)
  6. Who must receive a Notice of Right to Cancel in a refinance transaction?

    A. only parties who are signing the mortgage
    B. only the primary borrower
    C. anyone with ownership interest in the property
    D. only parties with 51% or more ownership in the property
    C. anyone with ownership interest in the property
    (this multiple choice question has been scrambled)
  7. John Brown and Jane Brown are co-owners of a property and are entering into a refinance transaction that is subject to rescission. John is provided with one copy of Notice of Right to Cancel and Jane receives no disclosures. What is their deadline for rescission?

    A. three years after closing
    B. midnight on the third day following closing
    C. 72 hours after closing
    D. three business days after closing
    A. three years after closing
    (this multiple choice question has been scrambled)
  8. Which of the following fees is not included on the Good Faith Estimate?

    A. real estate broker fees
    B. real estate taxes
    C. loan origination fees
    D. discount points
    A. real estate broker fees
    (this multiple choice question has been scrambled)
  9. If a mortgage broker is receiving yield spread premium on a loan transaction, on which of the following documents must the amount be disclosed?

    A. TIL Disclosure
    B. GFE
    C. borrower/broker agreement
    D. Affiliated business arrangement disclosure
    B. GFE
    (this multiple choice question has been scrambled)
  10. The TIL Disclosure Statement must be re-disclosed to a borrower if:

    A. the borrower rejects the APR stated on the initial TIL
    B. the APR varies more than 1/8th of 1% before closing
    C. the APR changes by more than 1/4th of 1% before closing
    D. the APR on the TIL and the GFE don't match
    B. the APR varies more than 1/8th of 1% before closing
    (this multiple choice question has been scrambled)
  11. Lenders must report detailed information about loan transactions and demographic information concerning borrowers in order to prove they are not discriminating. Which of the following laws creates that reporting requirement?

    A. Gramm-Leach-Bliley Act
    B. RESPA
    C. HMDA
    D. TILA
    C. HMDA
    (this multiple choice question has been scrambled)
  12. Yield spread premium is disclosed to the borrower:

    A. on the GFE and Settlement Statement
    B. only on high cost loans
    C. only on purchase transactions
    D. on the TIL Disclosure and promissory note
    A. on the GFE and Settlement Statement
    (this multiple choice question has been scrambled)
  13. Aggregate escrow analyses are used to do which of the following?

    A. prevent escrow shortages
    B. ensure the loan is properly amortized
    C. prevent escrow overages
    D. reduce burden on the servicer
    C. prevent escrow overages
    (this multiple choice question has been scrambled)
  14. If an individual submits false information for the purposes of obtaining a federally covered loan, he/she could face:

    A. a reprimand and loss of commission
    B. a misdemeanor conviction
    C. up to $1,000,000 fine and prison
    D. license suspension
    C. up to $1,000,000 fine and prison
    (this multiple choice question has been scrambled)
  15. When is the Servicing Disclosure Statement provided to a borrower?

    A. at the time loan servicing is transferred
    B. three business days after application
    C. three business days prior to closing
    D. at closing
    B. three business days after application
    (this multiple choice question has been scrambled)
  16. An initial servicing transfer notice must be provided to a borrower_______days prior to the transfer of servicing on a loan.

    A. 60
    B. 30
    C. 45
    D. 15
    D. 15
    (this multiple choice question has been scrambled)
  17. A lender has an affiliated business arrangement with a third party service provider. Under what circumstances can the lender require a borrower to use the services in a loan transaction?

    A. if there is no kickback or referral fees and the service provider is an attorney, credit reporting agency or appraiser
    B. under no circumstances; this is strictly prohibited by RESPA
    C. if there is no kickback or referral fees
    D. only if the lender has an ownership interest of more than 1%
    A. if there is no kickback or referral fees and the service provider is an attorney, credit reporting agency or appraiser
    (this multiple choice question has been scrambled)
  18. What is the primary purpose of the Truth-in-Lending Act?

    A. to ensure that creditors provide consumers clear disclosure of the terms of credit
    B. to ensure that applicants have equal opportunity to credit from lenders
    C. to ensure that third-party service providers do not charge high fees
    D. to ensure that creditors do not charge high interest rates on credit
    A. to ensure that creditors provide consumers clear disclosure of the terms of credit
    (this multiple choice question has been scrambled)
  19. Which of the following documents shows the cost of a loan expressed as an annual percentage rate?

    A. HUD-1
    B. TIL disclosure
    C. GFE
    D. Consumer Caution
    B. TIL Disclosure
    (this multiple choice question has been scrambled)
  20. A lender is permitted to deny an applicant credit based on which of the following factors?

    A. the applicant lacks income stability
    B. the applicant receives public assistance
    C. the applicant is divorced
    D. the applicant has participated in a consumer credit counseling program
    A. the applicant lacks income stability
    (this multiple choice question has been scrambled)
  21. The Homeowners Protection Act requires servicers to do which of the following?

    A. continue charging PMI until the borrower files an official request for its discontinuance
    B. drop PMI when the borrower's equity reaches 20%
    C. automatically discontinue PMI when the borrower reaches 80% LTV as long as payments have been made on time
    D. automatically discontinue PMI when the borrower reaches 78% LTV as long as payments have been made on time
    D. automatically discontinue PMI when the borrower reaches 78% LTV as long as payments have been made on time
    (this multiple choice question has been scrambled)
  22. When must the TIL Disclosure be provided to the borrower?

    A. prior to closing
    B. at closing
    C. within 3 days after closing
    D. within 3 days of application
    D. within 3 days of application
    (this multiple choice question has been scrambled)
  23. Which of the following documents discloses the annual percentage rate for a loan to a borrower?

    A. Promissory note
    B. TIL Disclosure Statement
    C. Good Faith Estimate
    D. Opt-out notice
    B. TIL Disclosure Statement
    (this multiple choice question has been scrambled)
  24. A mortgage professional may face which of the following if he or she engages in the illegal acceptance of referral fees?

    A. fines of $20,000 and up to 2 years in prison
    B. fines of $15,000 and up to 1 year in prison
    C. fines of $10,000 and up to 1 year in prison
    D. fines of $25,000 and up to 2 years in prison
    C. fines of $10,000 and up to 1 year in prison
    (this multiple choice question has been scrambled)
  25. If a mortgage broker decides to use telemarketing to establish leads for loan origination, which of the following should occur:

    A. the broker should establish policies and procedures to ensure compliance with the Do-Not-Call provisions of the Telemarketing Sales Act
    B. the broker should register with the FTC and FCC according to the regulations of the Telemarketing Sales Act
    C. the broker should invest in a state of the art predictive dialer
    D. the broker should only call former and current customers to ask for referrals
    A. the broker should establish policies and procedures to ensure compliance with the Do-Not-Call provisions of the Telemarketing Sales Act
    (this multiple choice question has been scrambled)
  26. The disclosure requirements of RESPA would apply to which of the following loans?

    A. a loan to purchase a duplex and rehabilitate it into a single family dwelling
    B. a farm loan
    C. a loan to purchase a property that includes a gas station and convenience store
    D. a loan to purchase 75 acres of land
    A. a loan to purchase a duplex and rehabilitate it into a single family dwelling
    (this multiple choice question has been scrambled)
  27. You take an application over the phone. Which of the following must occur within 3 days of a potential borrower submitting an application for a loan?

    A. submit the application to the lender for underwriting
    B. provide the borrower with confirmation of receipt of the application
    C. hand deliver or mail the Good Faith Estimate and Affiliated Business Disclosure
    D. hand deliver or mail the Good Faith Estimate and TIL Disclosure
    D. hand deliver or mail the Good Faith Estimate and TIL Disclosure
    (this multiple choice question has been scrambled)
  28. When must a lender advise loan applicants about the status of their application?

    A. within 3 days
    B. within 90 days
    C. within 1 week
    D. within 30 days
    D. within 30 days
    (this multiple choice question has been scrambled)
  29. What must be provided to a borrower if his/her loan application is turned down due to the credit score not meeting lender guidelines?

    A. copy of their credit report
    B. loan options for which they qualify
    C. adverse action notice
    D. verbal notice
    C. adverse notice action
    (this multiple choice question has been scrambled)
  30. What kind of loan transaction requires disclosure of the Settlement Cost Booklet?

    A. a new home purchase
    B. a reverse mortgage origination
    C. refinance transaction
    D. subordinate financing
    A. a new home purchase
    (this multiple choice question has been scrambled)
  31. The Gramm-Leach-Bliley Act specifies that a consumer must be given_______to opt out before personal financial information is disclosed to a third party.

    A. 30 days
    B. a reasonable opportunity
    C. 90 days
    D. 7 business days
    B. a reasonable opportunity
    (this multiple choice question has been scrambled)
  32. Which of the following scenarios would violate Section 8 of RESPA?

    A. an attorney accepts payment for performing a title search
    B. a title company pays a mortgage broker $100 per client for referral of settlement business
    C. a broker charges $50 for obtaining a $50 credit report
    D. a broker accepts a loan origination fee
    B. a title company pays a mortgage broker $100 per client for referral of settlement business
    (this multiple choice question has been scrambled)
  33. A borrower may request a copy of the HUD-1 how many days prior to settlement?

    A. 5
    B. 1
    C. 7
    D. 3
    B. 1
    (this multiple choice question has been scrambled)
  34. You must re-disclose the APR on a loan prior to closing if:

    A. 30 days have elapsed since the time of the initial disclosure
    B. it varies by more than 1/8 of 1% from its initial disclosure
    C. it is more than 1% greater than it was at the time of its initial disclosure
    D. it changes by more than 1/2 of 1% from its initial disclosure
    B. it varies by more than 1/8 of 1% from its initial disclosure
    (this multiple choice question has been scrambled)
  35. A borrower has gone to settlement for a cash out refinance on Tuesday. Their rescission period is over at midnight on Friday. When does the loan fund?

    A. Saturday
    B. Tuesday
    C. Friday
    D. Monday, the following week
    A. Saturday
    (this multiple choice question has been scrambled)
  36. The Real Estate Settlement Procedures Act includes all of the following provisions except?

    A. it limits the kids of business affiliations that settlement service providers may create
    B. it establishes the maximum origination fee that may be charged on a loan
    C. it prohibits receipt of referral fees
    D. it requires the use of a uniform settlement statement
    B. it establishes the maximum origination fee that may be charged on a loan
    (this multiple choice question has been scrambled)
  37. Which of the following is included when calculating finance charges?

    A. seller's points
    B. mortgage broker fee
    C. notary fees
    D. title insurance fee
    B. mortgage broker fee
    (this multiple choice question has been scrambled)
  38. Which federal law requires originators to use their best judgment in determining demographic information on a borrower if the borrower does not provide the information voluntarily?

    A. TILA
    B. RESPA
    C. HMDA
    D. CRA
    C. HMDA
    (this multiple choice question has been scrambled)
  39. According to federal fair lending laws which of the following cannot be considered when qualifying an applicant for a loan?

    A. a disabled applicant's credit report shows several instances of 60 and 90 day late credit card payments
    B. a female applicant is 4 months pregnant and might not continue working once her baby is born
    C. a minority applicant does not have sufficient funds for down payment
    D. a female applicant's credit report and an application show gaps of several months between jobs over the past 2 years
    B. a female applicant is 4 months pregnant and might not continue working once her baby is born
    (this multiple choice question has been scrambled)
  40. Under the Truth-in-Lending Act, a mortgage professional is required to disclose_______to a borrower.

    A. estimated closing costs
    B. terms of the credit transaction
    C. personal financial information provided by a credit reporting agency
    D. appraisal results
    B. terms of the credit transaction
    (this multiple choice question has been scrambled)
  41. Under the Fair Credit Reporting Act, which of the following entities has the burden of protecting a consumer's privacy when his/her credit information is being reported?

    A. credit reporting agency
    B. HUD
    C. mortgage broker
    D. the consumer
    A. credit reporting agency
    (this multiple choice question has been scrambled)
  42. Settlement fees and other charges related to a loan transaction must be recorded on the HUD-1 Settlement Statement as:

    A. actual dollar amounts
    B. estimated percentages of the loan amount
    C. actual percentages of the loan amount
    D. estimated dollar amounts
    A. actual dollar amounts
    (this multiple choice question has been scrambled)
  43. Which of the following is true of PMI disclosure?

    A. it is required on all loans
    B. it is different for each type of loan
    C. it is the same for fixed rate and adjustable rate loans
    D. it is applicable for loans on every type of property
    B. it is different for each type of loan
    (this multiple choice question has been scrambled)
  44. Flood insurance costs are included in which section of the HUD-1?

    A. title charges
    B. items payable in connection with the loan
    C. additional settlement charges
    D. reserves deposited with the lender
    D. reserves deposited with the lender
    (this multiple choice question has been scrambled)
  45. You have taken a loan application from a customer with an excellent credit score. When should you advise him about the status of his application?

    A. within 90 days
    B. within 3 days
    C. within 1 week
    D. within 30 days
    D. within 30 days
    (this multiple choice question has been scrambled)
  46. When a borrower uses a mortgage broker to originate his or her loan, who is ultimately responsible for providing the Good Faith Estimate?

    A. the lender
    B. the title company
    C. the mortgage broker
    D. the settlement agent
    C. the mortgage broker
    (this multiple choice question has been scrambled)
  47. Under the Gramm-Leach-Bliley Act, which of the following is considered nonpublic information?

    A. the assessed value of a subject property
    B. the street address of the property a borrower intends to purchase
    C. a borrower's current loan balance
    D. former owners of a particular property
    C. a borrower's current loan balances
    (this multiple choice question has been scrambled)
  48. If a creditor violates ECOA, how many years does a consumer have in which to take civil action?

    A. 1
    B. 10
    C. 5
    D. 2
    D. 2
    (this multiple choice question has been scrambled)
  49. An attorney and a lender entered into an agreement in which the attorney's car loan payments are paid by the lender in return for the names of potential loan applicants. Who has violated RESPA?

    A. the attorney
    B. the lender
    C. neither the attorney nor the lender
    D. both the attorney and the lender
    D. both the attorney and the lender
    (this multiple choice question has been scrambled)
  50. Which of the following payments is a violation of RESPA?

    A. a title company charges a market fee for the examination and evaluation of title evidence
    B. a mortgage broker pays a fee to determine if a property is located in a flood zone
    C. two mortgage brokers decide to split the mortgage broker fee from a residential loan transaction
    D. a mortgage broker accepts a fee for sending its customers to a title company
    D. a mortgage broker accepts a fee for sending its customers to a title company
    (this multiple choice question has been scrambled)
  51. Under provisions of the Truth-in-Lending Act, what is the maximum tolerance for an understated finance charge?

    A. $50
    B. $100
    C. $150
    D. $10
    B. $100
    (this multiple choice question has been scrambled)
  52. A lender is gathering information on loans for the purposes of HMDA reporting. Loans made on which of the following property types may be left out of the lender's reports?

    A. duplexes
    B. vacation homes
    C. travel trailers
    D. apartment buildings
    C. travel trailers
    (this multiple choice question has been scrambled)
  53. What is the purpose of Regulation B?

    A. to prohibit misleading advertisements for mortgage loans
    B. to regulate referral fees
    C. to prohibit discrimination in credit transactions
    D. to require disclosures of settlement costs
    C. to prohibit discrimination in credit transactions
    (this multiple choice question has been scrambled)
  54. What is the purpose of Regulation B?

    A. to prohibit misleading advertisements for mortgage loans
    B. to require disclosure of settlement costs
    C. to regulate referral fees
    D. to prohibit discrimination in credit transactions
    D. to prohibit discrimination in credit transactions
    (this multiple choice question has been scrambled)
  55. If a loan applicant does not disclose his or herrace on a loan application what should a mortgage professional do?

    A. provide the applicant with an adverse action notice
    B. note that the applicant has declined to answer and select a race based on visual observation
    C. inform the applicant that the lender will reject their loan application since it is incomplete
    D. ask the applicant to complete the demographics section
    B. note that the appplicant has declined to answer and select a race based on visual observation
    (this multiple choice question has been scrambled)
  56. A real estate agent receives a $50 restaurant gift certificate from a mortgage broker as a token of appreciation for referring a home buyer to the mortgage broker. Which of the following laws was violated as a result of this transaction?

    A. FCRA
    B. Fair Housing Act
    C. RESPA
    D. ECOA
    C. RESPA
    (this multiple choice question has been scrambled)
  57. All of the following disclosures are provided for an adjustable rate loan, per TILA guidelines, except:

    A. the index used to determine rate adjustments
    B. statement that the interest rate will be offered for the duration of the loan
    C. possibility of changes in the payment amount over time
    D. frequency of changes in the annual percentage rate
    B. statement that the interest rate will be offered for the duration of the loan
    (this multiple choice question has been scrambled)
  58. Why did Congress enact the Home Mortgage Disclosure Act?

    A. to ensure home values are consistent within geographic areas
    B. to identify discriminatory lending patterns
    C. to assist lenders in setting interest rates for residential loans
    D. to create a repository of information on real estate values
    B. to identify discriminatory lending patterns
    (this multiple choice question has been scrambled)
  59. Which of the following reasons for denying an applicant a loan is a violation of fair lending laws?

    A. the applicant's recent marital status may lead to a change in employment
    B. the applicant's age is below the minimum age for executing a contract
    C. the applicant's income doesn't meet the required level for repayment of the loan
    D. the applicant's credit history includes defaults on many credit payments
    A. the applicant's recent marital status may lead to a change in employment
    (this multiple choice question has been scrambled)
  60. A mortgage broker pays for title services on behalf of a developer. In return, the developer agrees to refer prospective buyers to the mortgage broker. Who has violated RESPA?

    A. both the mortgage broker and the developer
    B. the developer
    C. neither the mortgage broker nor the developer
    D. the mortgage broker
    A. both the mortgage broker and the developer
    (this multiple choice question has been scrambled)
  61. When calculating finance charges in compliance with TILA, all of the following are included except:

    A. appraisal fees
    B. settlement fees
    C. private mortgage insurance premium
    D. broker fees
    A. appraisal fees
    (this multiple choice question has been scrambled)
  62. RESPA does not apply to:

    A. loans for business, commercial, and agricultural purposes
    B. federally related mortgage loans
    C. loans secured by a lien on a principal dwelling
    D. subprime mortgage loans
    A. loans for business, commercial, and agricultural purposes
    (this multiple choice question has been scrambled)
  63. If a mortgage professional advertises a loan product at "7.25% APR," according to TILA what other information must be included in the same advertisement?

    A. no other information is required
    B. the finance charges for the loan
    C. the payment period for the loan
    D. the monthly payment for the loan
    A. no other information is required
    (this multiple choice question has been scrambled)
  64. According to TILA, what margin of error is permitted for the annual percentage rate in a regular fixed rate mortgage transaction?

    A. 1/8th of 1%
    B. 3/4 of 1%
    C. 1/2 of 1%
    D. 1/4 of 1%
    A. 1/8th of 1%
    (this multiple choice question has been scrambled)
  65. Which of the following facts about the Settlement Cost Booklet is NOT true?

    A. it can be reproduced in any form
    B. it can be stamped with the company name of a mortgage professional
    C. it can be made part of other larger documents
    D. it can be translated into other languages
    C. it can be made part of other larger documents
    (this multiple choice question has been scrambled)
  66. The Real Estate Settlement Procedures Act applies to:

    A. residential lot loans
    B. commercial loans
    C. residential loans
    D. residential investment properties such as condos and duplexes
    C. residential loans
    (this multiple choice question has been scrambled)
  67. What federal statute primary governs settlement of residential mortgage loans?

    A. TILA
    B. HMDA
    C. ECOA
    D. RESPA
    D. RESPA
    (this multiple choice question has been scrambled)
  68. Which of the following federal agencies creates the regulations for TILA?

    A. FHA
    B. HUD
    C. Federal Reserve
    D. Federal Trade Commission
    C. Federal Reserve
    (this multiple choice question has been scrambled)
  69. It is illegal for settlement service provider A to pay settlement service provider B a portion of fees charged to a borrower only when:

    A. service provider B has performed bona fide services in exchange for the fee
    B. both service providers have a written agreement in place to split fees
    C. the consumer is aware the service providers are splitting fees
    D. the service providers are separate entities and not affiliated in any way
    A. service provider B has performed bona fide services in exchange for the fee
    (this multiple choice question has been scrambled)
  70. Mr. Jones' loan application has been denied and you provide him with an Adverse Action Notice as required by ECOA. Which of the following pieces of information would NOT be included on the notice?

    A. his credit score
    B. information on the credit reporting agency if the adverse action is based on his credit report
    C. reasons for the denial of credit
    D. a description of credit he requested
    A. his credit score
    (this multiple choice question has been scrambled)
  71. According to fair lending laws, which of the following are you permitted to ask loan applicants?

    A. if they plan to have more than one child
    B. if they will stop working once they have children
    C. their religion
    D. their race
    D. their race
    (this multiple choice question has been scrambled)
  72. When must loan applicants receive an adverse action notice if they cannot qualify for a loan?

    A. within 90 days of loan application
    B. within 30 days of loan application
    C. within 60 days of loan application
    D. within 15 days of loan application
    B. within 30 days of loan application
    (this multiple choice question has been scrambled)
  73. Under ECOA, when is a notice concerning the right to obtain a copy of the appraisal due to a consumer?

    A. within 30 days of loan application
    B. within 90 days of loan application
    C. within 15 days of loan application
    D. within 60 days of loan application
    A. within 30 days of loan application
    (this multiple choice question has been scrambled)
  74. Jack Smith has been turned down for a loan. He would like to receive a copy of his appraisal. When must the lender receive his request for the appraisal?

    A. within 30 days after Jack has received a notice of the right to receive the appraisal
    B. within 90 days of application
    C. within 30 days of the appraisal
    D. within 90 days after Jack has received the notice of adverse action
    D. within 90 days after Jack has received the notice of adverse action
    (this multiple choice question has been scrambled)
  75. Which of the following is defined as the cost of credit expressed as a dollar amount?

    A. finance charge
    B. debt ratios
    C. Loan-to-Value
    D. APR
    A. finance charge
    (this multiple choice question has been scrambled)

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