MEC: PRACTICE TESTS 1 Flashcards

MEC: PRACTICE TESTS #1 Flashcards

• High cost loanThe Homeownership and Equity

Protection Act (HOEPA, Section 32 of TILA) outlines specific requirements for high-cost home loans.What entity was created byCSBS and AARMRfor the purpose of licensing and registering mortgage loan originators?A. The NMLSB. The CFPBC. The CSBS/AARMR DatabaseD. The FTC

UFMIP = 1.75%Mnemonic: FHA down payment is 3.5%.

UFMIP is 1/2 of that. 1.75%.So, 1.75% of $175,000 = $3062 Upon the recovery of any claim on the surety bond, the

licensee is required to file anew bond:A. Within 14 daysB.

Within 5 daysC. Within 3 monthsD. Immediately If a borrower has a second mortgage and wishes to refinance their first mortgage without losing or combining their second mortgage, the second mortgage holder would have to agree to subordinate. This would mean that the second mortgage would stay in second lien position allowing the new first mortgage to be in first position.If a creditordenies a loan, what document must be sent to the client to inform him of the denial?

• 30 daysUnder ECOA, it is the lender's responsibility to

notify an applicant of any action taken on the applicant's request for credit, whether favorable or adverse, within thirty (30) days of receiving the completed application.What isAPR?

• It requires lenders to create specific disposal policies to

ensure a borrower's information is properly disposed ofThe Red Flags Rule is specifically about protecting sensitive personal data from being exploited and involved in identity theft. The Disposal Rule is a separate rule that requires lenders to create specific disposal policies to ensure that a borrower's information is properly disposed of.For an interest-only loan of $210,000 with an interest rate of 3%, what would the monthly interest payment be?A.

$525B. $630C. $360D. $750

• A straw buyerStraw buyers are individuals used by

fraudsters to obtain mortgages. The straw buyer's personal information is used to obtain a mortgage loan fraudulently.The fraudster compensates the straw buyer for the use of their information.Luke is a mortgage loan originator, and he is working with a new borrower. Luke needs to determine how much the home is worth versus the loan amount that the new borrower is requesting. What is Luke attempting to determine?A. The borrower's debt-to-income ratioB. The borrower's loan amountC. The borrower's appraised valueD. The borrower's loan to value ratio

A. $5,400#1: Determine loan amount10% down of

$150,000=$135,000#2: Origination points & discount points

are 1% of the loan amount. So, 1% of $135,000 is

$1,350#3: $1,350 x 4 = $5,400

What law requires that acash transactionof more than$5,000be reported?A. BSA/AMLB. Dodd-FrankC. FTC Red FlagsD. RESPA

• ImmediatelyAll licensees are required to have a surety

bond, if for some reason the surety bond is acted upon or not longer at the full amount the licensee must immediately file a new bond, or their license would be in danger.When is thefundingon aresidential construction loanmade?A. At the time the loan documents are signedB.When the home is complete and an occupancy permit issuedC. When the filing period for all mechanics liens has expiredD. Periodically, as the home is being built

• 8 hours**TRICK QUESTION**8 hours for continuing

education, 20 hours for pre-licensing What arethree (3) thingsthat can cause achange of circumstance?

• Reg OReg N = MAPReg X = RESPAReg Z = TILA A lender has a policy that they never lend less than

$70,000 because they can't make any money off of loans

lower than $70,000. What would this be considered:A.

Disparate TreatmentB. Disparate ImpactC.DiscriminationD. Blockbusting

• Cost ApproachWhen using the cost approach, the

appraiser determines the value of the property by adding the estimated value of the land to the current cost of constructing a reproduction or replacement and then subtracting any amount of depreciation.Who insuresFHA loans?A. Freddie MacB. HUDC. Fannie MaeD. Loan Underwriter

• Regulates advertising regarding interest ratesTILA

(Regulation Z) regulates advertising Which of the following circumstances would disqualify the use ofincome generatedfrom abasement apartmentin qualifying for a Freddie/Fannie loan?A. LTV is calculated as a 2-unit propertyB. Property was appraised as a single-family dwellingC. The apartment was vacant for 4 monthsD. The property is zoned for 2-4 units TILAThe Truth in Lending Act (TILA, Regulation Z), deals specifically with the proper disclosure of APR's on initial disclosures and on advertising.Allie is looking to purchase a new property. She currently makes $3,200 a month gross. What would be the maximum payment she could have on her new property assuming aconventional mortgage?A. $1,376B. $2,208C. $2,308D.$896

• FHA programA203k loanis a rehabilitation loan offered

by FHA Under ECOA, the lender is required to provide the borrowera reason for denial. How long does the lender have to provide that reason?A. 60 daysB. 90 daysC. 30 daysD. 120 days

• Periodically, as the home is being builtThe money

borrowed through a construction loan is provided in a series of advances as the construction progresses.All of the following changes are because of TheDodd-FrankWall Street Reform and Consumer Protection Act except?A. The Consumer Financial Protection Bureau (CFPB)B. The Qualified Mortgage Rule (QM)C. The Red Flag Rule (RFR)D. The Ability to Repay Rule (ATR)

• The Red Flag Rule (RFR)The Red Flags Rule is rule

under FACTA and was not mandated by Dodd-Frank.TheTruth in Lending Actdoes which of the following?A.Regulates advertising regarding interest ratesB. Prevents advertising FHA financing to the exclusion of ConventionalC. Requires a closing cost breakdown on residential loansD. Requires all loan applications be made in person A government-sponsored enterprise is a type of financial services corporation created by the United States Congress. Both Fannie Mae and Freddie Mac are GSEs.

AnAlt-AorAlt Docloan would be considered a type of:A.

Adjustable rate mortgageB. Subprime mortgageC. Jumbo loan mortgageD. Nontraditional mortgage The VA IRRRL or VA Interest Rate Reduction Refinance Loan is similar to the FHA streamline but is offered as a VA to VA no-cash out refinance loan. IRRRL's do require an

additional funding fee, and the veteran cannot receive any additional funds out of their property.Hannah is choosing to escrow her taxes and insurance on her new home. She paid some towards her escrow account at closing. She is wondering when she will get information

from her servicer on her escrow account. RESPA requires that servicers provide an initial escrow account statement

within:A. 45 calendar days of closingB. 90 calendar days of

closingC. 30 calendar days of closingD. 60 calendar days of closing The Annual Percentage Rate (APR) is the cost of the loan over the life of the loan, expressed as a rate. It is not the interest rate! It is the cost of credit expressed as a rate. In this scenario, the costs of the loan make up 4.274 percent of what the borrower will pay over the loan term.What form is used forappraisals?Mortgage Servicing DisclosureRESPA requires that a mortgage lender that anticipates that they may sell the servicing rights on a loan is required to let the borrower know. The lender must notify the borrower that that may occur within three (3) days after receipt of the application TheHomeowners Protection Act of 1998does what?

• $95,800#1: Add up all debt1st mort: $55kHELOC:

$5kTax lien: $1.2kCredit Card: $4kTOTAL DEBT:

$65,200#2: Qualifies for 80% LTV House is worth

$200,000. 80% is $160,000#3:$160,000- DEBT $65,200-

Closing Costs $3,000#4: Answer$91,800 available in cash.

Whattwo piecesof information is needed to determine what anadjusted interest ratewill be on an adjustable rate mortgage?A. The margin and the indexB. The margin and the current interest rateC. The index and the current interest rateD. The margin, the index, and the current interest rate

• The Mortgage Servicing DisclosureRESPA requires that

a mortgage lender that anticipates that they may sell the servicing rights of a loan is required to let the borrower know. The lender must notify the borrower that that may occur within three (3) days after the receipt of the application. The disclosure statement must advise that the servicing of the loan may be assigned, sold, or transferred to any other person at any time.When an individual iscollecting documentsfor the purpose of completing the loan file, what are they considered to be doing to the loan?A. ProcessingB. UnderwritingC.OriginatingD. Closing

• A bridge mortgageA bridge loan is a short-term loan

secured by the borrower's current home (which is usually for sale) that allows the borrower to use their equity for building or down payment on a purchase of a new home before the current home sells.Thelegal linkbetween a person who owns property and the

property itself is:A. TitleB. DeedC. MortgageD. Promissory

Note

• 15 days from the effective date of transferWhen a

mortgage loan is assigned, sold or transferred, the former servicer must provide a disclosure at least fifteen (15) days before the effective date of the transfer. This letter is referred to as the Goodbye Letter. A letter from the new servicer must also be sent within fifteen (15) days after the effective date of the transfer. This letter is generally known as the Hello Letter.What requires the lender to disclose to borrowers the possibility that their loan will be sold, assigned or transferred to another?Gives borrowers the right to cancel or terminate PMIThe Homeowners Protection Act or HPA regulates the cancellation of PMI depending on the borrower's LTV.TRIDrequires a borrower to:(Hint: After LE is given, borrower does this)