FREE AND STUDY GAMES ABOUT MLO STUDY STACK

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FREE AND STUDY GAMES ABOUT MLO STUDY STACK

EXAM QUESTIONS

Actual Qs and Ans Expert-Verified Explanation

This Exam contains:

-Guarantee passing score -114 Questions and Answers -format set of multiple-choice -Expert-Verified Explanation

Question 1: When must the Truth In Lending Disclosure be given to the borrower?

Answer:

within 3 business days after receiving a consumer's app. for a mortgage loan and before any fees are collected from borrower (except reasonable credit report charges)

Question 2: what are per-texting provisions?

Answer:

prohibits certain practices designed to access confidential customer information.

Question 3: Define a Broker

Answer:

licensed individual/firm that charges a fee to serve as the mediator between buyer & seller. in business of arranging funding or negotiating contracts for a client but don't lend money.

Question 4: define Loan Prospector (LP)

Answer:

Freddie Mac's mortgage software program that gives its lenders an idea if a potential borrower is a good risk for the extension of credit

Question 5: what is a portfolio lender?

Answer:

lenders who make loans w/own funds and keep them on company books. don't sell them off in secondary market.

Question 6: what is a Backward Application?

Answer:

after identifying property to purchase, borrowers customize their income to meet loan criteria

Question 7: what is High Loan To Value (HLTV)

Answer:

HLTV mortgage/home equity loan is one that equals or exceeds the value of the borrower's home. Also known as Negative Equity Mortgage

Question 8: what is the purpose of the Gramm-Leach-Bliley Act (GLBA)?

Answer:

requires lender to disclose its privacy policies and info. sharing practices to every customer at time of opened and each year thereafter. enforced by FTC

Question 9: Promissory Note

Answer:

written promise to repay a debt. One person/entity loans another money, and the other signs a promissory note, promising to repay the loan (plus interest).

Question 10: What is DTI (Debt To Income)?

Answer:

comparison ratio of gross income to housing and non-housing expenses.Question 11: The ECOA (REG.B) prohibits discrimination against whom when applying for credit and/or extensions of credit

Answer:

Race, religion, receipt of income from public assistance, sex marital status, national origin, color, and/or age

Question 12: what are the 4 C's of underwriting?

Answer:

Capacity (income), Character (credit history), Capital (cash savings), and Collateral (property value).Question 13: What is the amount/percentage added to the index at each adjustment interval to determine the new interest rate to be paid by the borrower?

Answer:

The Margin. This remains constant over the life of the mortgage. Index rate+margin=interest rate.

Question 14: what is a due on demand clause?

Answer:

mortgage clause that allows Lender (at any time) can require borrower to full repayment of loan immediately.

Question 15: what is a closed-end mortgage?

Answer:

cannot be prepaid, renegotiated, or refinanced w/out paying breakage costs to lender. also prohibit pledging collateral that has already been pledged to another party.

Question 16: what is Certificate of Reasonable Value (CRV)

Answer:

based on an appraiser's estimate of the value of the property to be purchased

Question 17: Adjustable Rate Mortgage (FHA 251)

Answer:

helps to keep mortgage interest rates and payments low they may change over the life of the loan. Max fluctuation amount in interest-rate in any given year is 1% point. and Life of loan is 5% points.

Question 18: What is American Land Title Association (ALTA)?

Answer:

The association develops ALTA title insurance forms used voluntarily by title insurers and works to develop a better understanding of its industry among those who use land title services

Question 19: Conventional Sub-prime Loan

Answer:

Mortgage loan made to individuals who don't qualify for loans that may be sale-able to Fannie or Freddie.

Question 20: define Service Release Premium (SRP)

Answer:

income paid to a bank when it sells a mortgage with a higher than par rate into the secondary market

Question 21: define Yield Spread Premium (YSP)

Answer:

used by a mortgage broker to make a profit or used to pay for a borrower's closing costs on a loan.usually calculated as % of loan amount & paid to the broker by a 3rd party

Question 22: what loans require an escrow/impound account?

Answer:

insured conventional loans (exceeding LTV of 80%), all FHA/VA loans require borrower to escrow for property taxes and homeowners' insurance.

Question 23: According to the FACT Act what is required by creditors?

Answer:

Requires creditors to make certain disclosures regarding a borrower's credit history.Question 24: what does HOEPA (Homeownership and Equity Protection Act) Section 32 NOT apply to?

Answer:

Residential Mortgage transaction (pg. 95), reverse mortgage, and open-end credit plan (traditional home equity line of credit).

Question 25: define Prepayment Penalty

Answer:

is a charge for paying off the loan early