Fair Housing Act and Credit Scoring - Key Concepts and Questions, Exams of Nursing

Download Fair Housing Act and Credit Scoring - Key Concepts and Questions and more Exams Nursing in PDF only on Docsity! HUD Certification Exam| 115 QUESTIONS| WITH COMPLETE SOLUTIONS 2024.Assured Success. Deed Restrictions - Correct answer Legally enforceable terms that govern the use of real estate 1. Redlining - Correct answer The practice of refusing to make residential loans or imposing more onerous terms on any loans made because of the predominant race, color, national origin, religion, sex, disability, or familial status of the area's residents. 2. Civil Rights Act of 1968 - Correct answer Following the assassination of Dr. Martin Luther King Jr., Congress passed what monumental piece of legislation, which prohibits discrimination in housing sales, rentals, and financing based on race, color, national origin, religion, sex, disability and familial status? 3. 7 - Correct answer The Fair Housing Act, as amended, protects how many characteristics? 4. Reasonable Modification - Correct answer A property manager of an apartment complex that receives federal financial assistance installs a ramp so that a tenant in a wheelchair can easily access her first-floor apartment. 5. Reasonable Accommodation - Correct answer Housing provider has a policy of requiring tenants to come to the rental office to pay their rent. A tenant with a mental disability, who is afraid to leave her unit, is allowed to mail her rent payment. 6. True - Correct answer The Fair Housing Act does not prohibit a lender from showing potential clients information about different loans. 7. Fair Housing Assistance Program (FHAP) - Correct answer Provides annual funding to state and local agencies that enforce fair housing laws that are substantially equivalent CHARLIE WINDLER 1 to the Fair Housing Act. These funds go towards an agency's capacity building, administrative costs, investigative and enforcement efforts, training and other projects designed to support enforcement of fair housing law. 8. Fair Housing Initiatives Program (FHIP) - Correct answer Provides funding to fair housing organizations and nonprofits that assist people who may have been victims of housing discrimination. 9. Marketing Analysis - Correct answer Aim is to identify groups of people who would benefit most if targeted by the campaign, the characteristics of these people, and their expectations. 10. Networking Event - Correct answer The opportunity to increase awareness of the plans and actions of housing industry members, private organizations and foundations, public housing agencies, neighborhood groups, regional organizations, and others to further fair housing objectives. 11. Personal Information - Correct answer The section of the credit report that contains employer details. 12. Account Information - Correct answer The section of a credit report that contains information about a student loan. 13. Public Records - Correct answer The section of the credit report that contains court information such as a bankruptcy. 14. Inquiries - Correct answer The section of the credit report that will show recent attempts to open a credit card. 15. Consumer Rights - Correct answer The section of the credit report that contains information about how to correct inaccuracies. CHARLIE WINDLER 2 36. Equity - Correct answer Value of ownership interest in property. 37. Foreclosure - Correct answer A legal process in which mortgaged property is sold to pay the loan of a defaulting borrower. 38. Escrow - Correct answer Funds to be used for specific purposes by parties carrying out a mutual transaction, deposited with a third party. 39. Closing Costs - Correct answer Fees for final property transfer that are not included in the price of the property. 40. Homeowners Insurance - Correct answer An insurance policy that can provide coverage for damages to a dwelling and contents that belong to the homeowner. 41. Front-end Ration - Correct answer A rate that calculates a borrower's housing-related obligations as a percentage of gross monthly income. AKA - Housing Ratio 42. Conventional Loan - Correct answer A mortgage loan backed by private lenders. Loans with a DP less than 20% of purchase price may require private mortgage insurance (PMI) 43. Principal - Correct answer The amount of money borrowed to buy a house or the amount of the loan that has not been paid back to the lender. 44. Mortgage Insurance Premium (MIP) - Correct answer A monthly payment, usually part of the mortgage payment for FHA loans, paid by a borrower for mortgage insurance. 45. Private mortgage Insurance (PMI) - Correct answer Insurance policy that protects a lender from potential risks when a homebuyer pays less than 20% for a down payment. CHARLIE WINDLER 5 46. Ground Rent - Correct answer An arrangement in which the owner of a dwelling or structure does not own the land on which the structure resides. 47. Association Dues - Correct answer Charged by community or Homeowners Association to pay for repairs, upkeep, landscaping, improvements and property management. 48. Adjusted Gross Income - Correct answer Gross income minus adjustments, or reductions, that one is eligible for, such as deductions for unreimbursed business expenses, tuition and fees, and contributions to certain retirement accounts. 49. Profit and Loss Statments - Correct answer A summary of revenue, costs, and expenses incurred during a defined period, such as a fiscal year. 50. Back-End Ratio - Correct answer A rate that calculates a borrower's total monthly debt, including housing and other debt obligations, as a percentage of gross monthly income. 51. Character - Correct answer Credit history, employment history, and housing stability to determine the likeliness that the borrower will repay their debts 52. Capacity - Correct answer Lender considers consistency of employment and income, adequacy of income to repay debt, recurring debts and frequency and type of wages 53. Capital - Correct answer Lenders inquire about how much money a borrower has saved to pay a deposit or down payment for the home intended to purchase. 54. Collateral - Correct answer Lenders often request a borrower to pledge specific property or assets as collateral to secure repayment of loan. 55. Front-end ratio for obtaining a conventional loan - Correct answer 28% CHARLIE WINDLER 6 56. Front-end ratio for obtaining an FHA loan - Correct answer 31% 57. Affordable front-end ratio for renters - Correct answer 30% 58. Per FHA, you are considered self-employed if you have ___% or greater ownership interest in a business. - Correct answer 25% 59. Subprime Mortgage Loans - Correct answer A type of mortgage with less stringent lending and underwriting terms and conditions, usually offered to borrowers with blemished or limited credit histories. 60. Type of mortgage that is a good fit for those that have limited funds for a down payment and closing costs - Correct answer FHA Mortgage 61. Type of loan that may be a good fit for those that have a poor credit history and/or are ineligible for other loans - Correct answer Subprime Mortgage Loan 62. Type of mortgage may be a good fit for eligible veterans, suitable credit and sufficient income and have a certificate of eligibility. - Correct answer VA Loan 63. Type of mortgage may be a good fit for those who want to live in eligible rural areas, make less than 115% AMI, need flexible credit guidelines, may not have funds for a DP - Correct answer USDA Loan 64. The midpoint in the family income range for a metropolitan statistical area of for the non-metropolitan parts of a state - Correct answer Area Median Income 65. Fixed Rate Mortgage - Correct answer Typically paid off in 30 years, has an interest rate that doesn't fluctuate. CHARLIE WINDLER 7 transaction disclosures that describe closing costs, lender servicing and escrow account practices, and business relationships 84. Truth in Lending Act (TILA) - Correct answer Requires lenders disclose important information to protect consumers against 85. inaccurate and unfair loan billing and credit card practices, it requires lenders to provide 86. consumers with loan cost information so that they can comparison shop. 87. Know Before you Owe (TRID) - Correct answer requires easier to use mortgage disclosure forms that clearly outline the terms of the mortgage to the borrower and provide detailed explanations about how form should be completed and used. 88. The Know Before you Owe rule combined the Good Faith Estimate and the Truth in Lending disclosure and became what document? - Correct answer Loan Estimate 89. The Know Before you Owe rule combined the HUD-1 and the final TIL disclosure became what document? - Correct answer Closing Disclosure 90. Loan Estimate - Correct answer Designed to help consumers understand the key features, costs, and risks of the mortgage loan for which they are applying, must be provided to consumers no later than three business days after they submit a loan application 91. Closing Disclosure - Correct answer Designed to help consumers understand all of the costs of the transaction, must be provided to consumers at least three business days before closing. 92. Home Ownership and Equity Protections Act (HOEPA) - Correct answer Federal law enforcing special disclosure requirements and restrictions on terms for loans that meet high-cost mortgage tests. CHARLIE WINDLER 10 93. What is the biggest factor in determining the cost of your insurance? - Correct answer Location of your home 94. What item is critical to consider when working with a client to prepare a household system maintenance plan? - Correct answer Target Replacement Date 95. When preparing a emergency preparedness plan, where is the best location for meeting point? - Correct answer A location outside of the neighborhood, preferably a place where your family can live temporarily. 96. Home Equity Loan - Correct answer Provides a lump sum of money for home improvements - often referred to as a second mortgage 97. Home Equity Line of Credit (HELOC) - Correct answer A line of credit from which you can borrow at any time during the draw period, up to your credit limit. 98. FHA 203k Loan - Correct answer A loan insured by FHA to provide you with an initial loan for purchasing a home as well as funding for home improvement. 99. Streamline 203k Loan - Correct answer Permits homebuyers and homeowners to finance up to $35K into their mortgage to repair, improve, or upgrade their home. 100. Title 1 Loan - Correct answer A loan insured by FHA that may be used for alterations, repairs, and site improvements on single family homes and for alterations and repairs on multifamily homes. 101. Energy Efficient Mortgage (EEM) - Correct answer Assists individuals to purchase an energy efficient home or refinance a home to make energy efficient improvements 102. HELOC - Correct answer Best Improvement loan: A client's home improvement plan consists of multiple expenses that may be paid over an extended period of time. CHARLIE WINDLER 11 103. FHA 203k Loan - Correct answer Best improvement loan: A client intends to purchase a home that needs major repairs and will make those repairs with funding rolled into the mortgage loan. 104. Energy Efficient Mortgage - Correct answer Best loan: A client would like to add insulation to the basement and attic as well as seal air leaks in order to reduce the home's energy consumption. 105. Cash-Out Refinancing - Correct answer Best Improvement loan: A client leverages home equity through a new, larger loan to access funding to make improvements to the home 106. Home Equity Loan - Correct answer Best Improvement loan: A client's home improvement plan consists of a large one-time expense. 107. Streamlined 203k Loan - Correct answer Best loan: There are a handful of minor repairs that a client would like to make to the home that he is buying. He expects that they will be complete in just a few months. 108. Special Assessments - Correct answer Funds collected to pay for large maintenance projects that benefit the entire community. 109. Teaser Rate - Correct answer An initial temporary interest rate on an ARM that results in lower mortgage payments and only remains in effect for a short period of time before increasing. 110. Dual Tracking - Correct answer The process that occurs when the servicer moves forward with foreclosure while simultaneously working with the borrower to avoid foreclosure. CHARLIE WINDLER 12